SFT Transaction or not.

Hi Naveen,

Here’s a breakdown to clarify your query about the SFT (Specified Financial Transactions) reported in AIS (Annual Information Statement) and why certain transactions show up:

1. Why are FD interest and savings interest showing under SFT?

• SFT Codes Explained:

  • SFT-016TD: Interest on Time Deposits (FD interest).

  • SFT-016SB: Interest on Savings Bank Accounts.

• Banks and financial institutions report interest income on deposits exceeding ₹10K in a financial year under SFT rules to the Income Tax Department.

• Even if the principal FD amount is less than ₹10 lakh, interest earned exceeding ₹10K is reportable.

• Hence, interest amounts like ₹33,321 on FD or ₹14,521 on savings account are reported as specified financial transactions.

2. About reporting threshold for FDs:

• Deposit threshold for reporting the principal amount: ₹10 lakh or more.

• Interest threshold for reporting: ₹10K or more.

• So, even if the FD principal is less than ₹10 lakh, but interest exceeds ₹10K, the interest amount is reported under SFT.

3. Why are small cash deposits showing under SFT?

• Cash deposits exceeding ₹10 lakh in aggregate during the financial year are reported.

• Your individual cash deposits like ₹19K, ₹32K, and ₹3,500 are small, but if total cash deposits in that FY exceed ₹10 lakh, it will be reported.

• From your amounts, total cash deposits don’t cross ₹10 lakh, so these small cash deposits should not be reported individually under SFT.

• But sometimes AIS may show cumulative cash deposits, or it could be an error or mismatch.

• It’s advisable to check with your bank for the exact reported transactions.

Summary:

• Interest earned on deposits > ₹10K is reported as SFT.

• FD principal is reported only if ≥ ₹10 lakh.

• Cash deposits reported only if aggregate > ₹10 lakh in the year.

• Small deposits individually under ₹10 lakh aren’t reported.

• If you see mismatch or doubt, verify with bank or raise an objection in AIS.