Indian Income Tax Department Identifies Common Deficiencies in Bank, Mutual Fund Statement of Financial Transactions Filings

Income Tax Department Identifies Common Errors in Statement of Financial Transactions Filings

The Income Tax Department's analysis of Statement of Financial Transactions (SFT) filings by banks and mutual funds has revealed a range of common errors that can cause inconvenience for taxpayers. According to officials, these errors include duplicate reporting, incorrect transaction values, and missing PAN details.

Under the Income Tax Act, reporting entities such as forex dealers, banks, sub-registrar, NBFC, post offices, issuer of bonds/debentures, mutual fund trustees, and companies paying dividends or buying back shares are required to furnish details of prescribed financial transactions and reportable accounts in the SFT to tax authorities. The due date for filing SFTs for the financial year 2025-26 is May 31, 2026.

Income Tax department officials have observed several common mistakes in SFT reporting, including incorrect or missing PAN details, duplicate reporting of transactions, incorrect transaction values (particularly in transactions in joint accounts/names), lack of reconciliation of transaction records before filing, insufficient quality checks before submission, and delay in filing SFTs.

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To avoid such errors, officials underlined the need for reporting entities to take measures such as validating PAN information before filing, reconciling transaction data internally, ensuring timely submission, and conducting periodic quality checks before uploading SFTs.

The tax department's Annual Information Statement (AIS) allows taxpayers to view important financial information linked to their PAN directly on the Income-tax portal. This includes reports received in SFT, such as information relating to interest income, dividends, securities transactions, mutual fund investments, property transactions, and other specified financial transactions. This helps taxpayers verify information while filing their Income-tax Returns and supports more accurate return filing.

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