Reporting of dividend distribution by companies to the IT department under SFT reporting

CA CMA Sagar Jaiswal | Last updated: 15 May 2021

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Quick Summary

Companies paying dividends are now required to report this information to the Income Tax Department under Section 285BA of the Income Tax Act, as per Notification No. 16/2021. This involves registering on the Income Tax Reporting Portal to obtain an ITDREIN and submitting a statement of financial transactions (SFT) by 31st May each year. The report requires details such as the recipient's name, PAN, Aadhaar, address, and the dividend amount paid.

(Notification no. 16/2021 dated 12^th March, 2021, only relevant part related to Dividend Income)

Provision of Income tax

Section 285BA of the Income Tax Act, 1961 read with rule 114E of Income Tax Rules, 1962 says certain persons are required to report a statement of financial transaction (SFT) or reportable account to the Income Tax Department.

Latest Notification

Central Board of Direct Taxes has issued notification No. 16/2021 dated 12.03.2021 to include reporting of information relating to dividend income.

Applicability of said notification

Any company (All listed/non listed/Govt./Non-Govt. etc.) paying dividend. The information of dividend payment needs to be report to the Income tax department in the prescribed format.

Dividend Reporting to IT Dept: SFT Rules for Companies

Format

1	2	3	4	5	6	7	8	9	10
RSN*	FY	Name	PAN	Aadhaar	Address	Pincode	Mobile	Email	Dividend

*RSN refers to Reporting serial No. (Any unique No.)

Steps to be taken

Company needs to register themselves with the Income Tax Department (ITD) at the Reporting Portal.(Process of registration has been elaborated below)
Companies are required to prepare the data file in prescribed format from their internal system. The data files prepared by internal system/report preparation utility should be validated using Text File Validator /Submission Utility.(Utility is available at reporting portal)
The statement of financial transactions shall be furnished on or before the 31 st May, immediately following the financial year in which the transaction is registered or recorded i.e. 31st May, 2021 for Financial Year 2020-21.

Process of registration at Income tax reporting portal and obtaining ITDREIN (Income tax Department Reporting entity identification number)

First of all we need to register at reporting portal.
Login at income tax portal (www.incometaxindiaefiling.gov.in) like normal login.
Go on My account and select reporting portal (Beta Version) the link will bring you to another site (www.report.insight.gov.in)
Select type of form i.e. 61/61A/61B (For filing of SFT form 61 is required)& select reporting entity type (like bank, depository, others etc.)
Information required for registration in reporting portal:

Name of Reporting entity
Address of Reporting entity
Regulator name (i.e. Ministry/Department under which reporting entity covers)
Principal officer’s information (PO) (Any officer designated by reporting entity)
Name, PAN, Designation, Mobile e mail id of PO
Complete address of PO
Digital signature of PO

On submission an acknowledgement will generate containing registration request number.
On successful registration REIN shall be communicated to the registered mail.

Kindly Note:

User id will be the PAN of Principal officer
ITDREIN is 16 character identification number
Format of REIN shall consist of first 10 digits of PAN. (DOT),Code of form for which REIN has been generated, code of reporting entity and code of sequence number.