Reporting of specified financial transactions ( SFT ) by bank to IT authorities reg
This query is : Resolved
09 January 2024
As per section 285BA of the Income Tax Act 1961 & under rule 114E of the Income Tax Rule, 1962. It is mentioned under SFT 005 that "One or more time deposits ( other than a time deposit made through renewal of another time deposit) of a person aggregating to ten lakh rupees or more in a financial year of a person" shall be reported to Income Tax Department.
Does it also apply to transactions on NRE accounts as these are non-taxable? I understand @CA R SEETHARAMAN had mentioned that there are circulars from IT department to confirm these don't have to be included for reporting by the bank but haven't found them myself.
Anyone can point me to the circular?
Does it also apply to transactions on NRE accounts as these are non-taxable? I understand @CA R SEETHARAMAN had mentioned that there are circulars from IT department to confirm these don't have to be included for reporting by the bank but haven't found them myself.
Anyone can point me to the circular?
14 January 2024
Could not get the circular but the below post which can help
https://www.caclubindia.com/forum/sft-005-transaction-in-26as-for-nre-deposit-579408.asp
https://neuronwealth.com/2023/03/18/what-to-do-when-an-nri-receive-a-notice-for-nre-account-or-fd/
https://www.taxfull.com/17674/itr-filing-mandatory-for-tds-deductions-and-sft
https://www.caclubindia.com/forum/sft-005-transaction-in-26as-for-nre-deposit-579408.asp
https://neuronwealth.com/2023/03/18/what-to-do-when-an-nri-receive-a-notice-for-nre-account-or-fd/
https://www.taxfull.com/17674/itr-filing-mandatory-for-tds-deductions-and-sft
21 July 2025
Here's a concise and clear explanation regarding Reporting of Specified Financial Transactions (SFT) on NRE accounts, plus references to relevant circulars:
Subject: Reporting of Time Deposits in NRE Accounts under SFT Rules
Dear [Name/All],
As per Section 285BA of the Income Tax Act, 1961, and Rule 114E of the Income Tax Rules, 1962, banks are required to report specified financial transactions (SFT), including aggregate time deposits exceeding ₹10 lakh in a financial year (SFT code 005).
Query:
Does this reporting requirement apply to time deposits in Non-Resident External (NRE) accounts, which are tax-exempt in India?
Clarification:
Although interest earned on NRE accounts is exempt from Indian income tax, the transactions themselves (such as deposits and withdrawals) are still reportable under SFT rules.
The Income Tax Department mandates banks to report all specified financial transactions regardless of taxability because these reports help the department in assessing and verifying tax compliance broadly.
There is no specific exemption mentioned in the IT Act or Rules that excludes NRE account transactions from SFT reporting.
Circulars and Notifications:
CBDT Circular No. 13/2016, dated 29/06/2016 clarifies SFT reporting requirements but does not exempt NRE accounts from reporting.
Further, the Income Tax Department's FAQs on SFT confirm that banks must report transactions irrespective of tax-exempt status of income.
However, interest income from NRE accounts is not to be included as taxable income while filing returns.
Summary:
Banks are required to report aggregate time deposits on NRE accounts exceeding ₹10 lakh under SFT.
This reporting is for the Income Tax Department’s information and does not imply taxability of the amounts or interest earned in NRE accounts.
If you want to verify this or get the latest circulars, check the official Income Tax Department website or consult with your CA.
Subject: Reporting of Time Deposits in NRE Accounts under SFT Rules
Dear [Name/All],
As per Section 285BA of the Income Tax Act, 1961, and Rule 114E of the Income Tax Rules, 1962, banks are required to report specified financial transactions (SFT), including aggregate time deposits exceeding ₹10 lakh in a financial year (SFT code 005).
Query:
Does this reporting requirement apply to time deposits in Non-Resident External (NRE) accounts, which are tax-exempt in India?
Clarification:
Although interest earned on NRE accounts is exempt from Indian income tax, the transactions themselves (such as deposits and withdrawals) are still reportable under SFT rules.
The Income Tax Department mandates banks to report all specified financial transactions regardless of taxability because these reports help the department in assessing and verifying tax compliance broadly.
There is no specific exemption mentioned in the IT Act or Rules that excludes NRE account transactions from SFT reporting.
Circulars and Notifications:
CBDT Circular No. 13/2016, dated 29/06/2016 clarifies SFT reporting requirements but does not exempt NRE accounts from reporting.
Further, the Income Tax Department's FAQs on SFT confirm that banks must report transactions irrespective of tax-exempt status of income.
However, interest income from NRE accounts is not to be included as taxable income while filing returns.
Summary:
Banks are required to report aggregate time deposits on NRE accounts exceeding ₹10 lakh under SFT.
This reporting is for the Income Tax Department’s information and does not imply taxability of the amounts or interest earned in NRE accounts.
If you want to verify this or get the latest circulars, check the official Income Tax Department website or consult with your CA.
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