High value transaction 285BA

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One of my client term deposit(Fixed deposit ) of 11 lakhs got matured insted of renewing it he closed the old deposit transferd the money to saving bank a/c and made a new deposit of 11 lakhs whould it be regarded as high value transaction under income act u/s 285BA ?
Replies (8)
Sec 285 BA
STATES THE FOLLOWING
1. PAYMENT MADE IN CASH FOR PURCHASE OF BNK OVERDRFT PAY ORDER AGGREGATING AMOUNTING TO RS.10 LAKHS.
2. PAYMENTS MADE IN CASH RS. 10 LKS OR MORE DURING THE FINANCIAL YEARFOR PURCHASE OF OREPAID INSTRUMENT.
Sir I am asking about the term deposit of 10 lakhs or more made from old term deposit instead of renewing it, made a new deposit whould it be regarded as high value transaction u/s 285BA
Yes it would be regarded as high value transaction.
Term Deposit in Bank and Post Office -----
Transaction to be reported Under AIR

One or more term deposit (other than renewal) aggregating to Rs. 10 Lakh or above. (Under 285BA)

The new FDR of 11 lakhs will be surely regarded as high value transaction.

1. Annual Information return(AIR) is to be submitted by the bank if the value of the time deposit is more than Rs. 10 lakhs during the FY. 
2. However, the bank will not report this transaction u/s 285BA as Specified Financial Transaction (SFT) as this deposit is nothing but a renewal of another time deposit. 
3. If the time deposit is renewed then it can be excluded as reporting this again will mean that a new amount was deposited into an account. 
4. The exact wordings are as under,
"Other than a time deposit made through renewal of another time deposit". Even if you have transferred the matured amount to your SB account still it is a renewed time deposit. This Rs. 11 lakhs is not from any new source. 
5. It will not be reported as a high-value transaction in AIR as per sec 285BA of the act. 
Please correct me if the above solution has an alternative view. 

In addition to my above reply , to further clarify that renewal means exchange of new FDRs in lieu of old matured FDR. May be new FDR might have different term period, different FDR amounts aggregating to 11 lakhs .

But once old FDR maturity amount transferred to savings accounts, it is called closure of old FDR.

Subsequently you may again decide and transfer funds to FDR. But then it is considered fresh FDR and not renewal of old FDR.

Under this circumstances, new FDR of 11 lakhs will be surely regarded as high value transaction
subject to AIR reporting.

1. Pravin Ji, then what exactly do they mean when they say "renewal of another time deposit". Other time deposits cannot be renewed and open a new deposit. As you have said once the FD transferred to the SB account it will be regarded as the closure of that time deposit. 
2. What exactly do they mean by "Renewal of another time deposit"

In my view -----
Closure of FD on maturity :-

The maturity proceeds after the due date will then be transferred to the savings account of the individual.

In case of online FD, the option to renew or close the FD on the maturity date can be done online.

The maturity proceeds will then be credited to your savings bank account.
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However while preparing AIR statement, the bank software will consider Aggregate FDR maximum balance at any time during the FY.

so in so far as AIR is concerned, it will report 11 lakhs only being FDR balance at any time during the year.

So no double counting.


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