The Central Board of Direct Taxes (CBDT) has notified the format, procedure and guidelines for submission of Statement of Financial Transactions (SFT) for depository transactions under the Income-tax Act, 2025.
The notification has been issued by the Directorate of Income Tax (Systems) under section 508(1) of the Income-tax Act, 2025 read with sub-rule (6) of rule 237 of the Income-tax Rules, 2026. The framework is aimed at providing transaction-related information for the pre-filling of income-tax returns, particularly information relating to capital gains from the transfer of listed securities and units of mutual funds.
Who is required to report SFT?
The notification requires all depositories, as defined under the Depositories Act, 1996, to prepare the prescribed data file from their internal systems.
The reporting entities have to submit the required data files through the SFTP server using the login credentials communicated separately. In addition, a separate control statement has to be signed, verified and furnished by the designated director.
SFT reporting will be done twice a year
One of the important changes for reporting entities is the prescribed half-yearly reporting cycle .
The SFT for:
| Reporting Period | Due Date |
|---|---|
| First half of financial year ending September 30 | October 31 |
| Second half of financial year ending March 31 | April 30 |
Thus, reporting entities will need to ensure that the relevant depository transaction information is compiled and submitted within the specified timelines.
Information to be shared with taxpayers
The reporting entities are also required to provide the information reported to the Income Tax Department to the concerned account holder .
This is intended to help taxpayers reconcile the transaction information appearing in their Annual Information Statement (AIS) with their own records.
This requirement is particularly relevant for taxpayers having multiple securities transactions, as differences between their records and AIS information can otherwise create difficulties while preparing the income-tax return.
Correction and deletion of incorrect information
The CBDT guidelines also provide a mechanism for correcting or deleting information already submitted.
Where a reporting person or entity discovers an inaccuracy, or where a defect is communicated to it, the entity is required to remove the defect by submitting an appropriate correction or deletion statement .
The submission guidelines further clarify that where uploaded data needs modification, a Correction Statement is required. Only the records requiring correction need to be uploaded in such a statement. For deletion of previously uploaded information, a deletion request has to be filed.
How will capital gains information be determined?
The depository transaction summary will be used for pre-filling gain, income or loss from securities transactions.
The guidelines state that the transaction summary is to be prepared for user-initiated debit transactions in the demat account. For off-market debits, information is not required where the transferor and transferee are the same person.
For debit transactions, the estimated sale consideration is to be determined using the weighted average price, taking into account the actual value of the transaction. The taxpayer will, however, be able to modify the sales consideration before filing the return.
FIFO method to determine period of holding
The guidelines prescribe the use of the First in First Out (FIFO) method to identify the corresponding credit transaction for every debit transaction.
The period of holding is to be determined based on the difference between the date of sale and the date of acquisition of the relevant share or security in the demat account. This information is then used to classify the asset as a short-term or long-term capital asset .
For several specified classes of securities, the minimum holding period prescribed in the guidelines is 12 months . However, certain categories such as units of business trusts and other units have different holding-period requirements depending on whether they are listed or unlisted. Market Linked Debentures are treated as short-term capital assets irrespective of the holding period.
How will cost of acquisition be calculated?
For corresponding credit transactions, the estimated cost of acquisition is generally determined using the weighted average price, based on the actual value of the transactions where the purchase took place on or after February 1, 2018.
For purchases made before February 1, 2018, the end-of-day price available with the depository is to be considered.
The guidelines also prescribe that the estimated cost of acquisition will be taken as NIL in specified cases such as off-market purchases, corporate actions or transactions undertaken through modes other than an exchange. For IPO credits, the cost is to be calculated based on the number of shares allotted multiplied by the per-unit allotment price.
Importantly, the taxpayer will have the ability to modify the estimated cost of acquisition before filing the income-tax return.
Grandfathering of assets acquired before February 1, 2018
The notification also provides for the computation of cost of acquisition in cases involving long-term capital assets acquired before February 1, 2018.
For specified equity shares, equity-oriented fund units and business trust units, the cost of acquisition is to be determined by applying the prescribed provisions, including comparison involving the actual cost, fair market value as on January 31, 2018 and the full value of consideration.
The guidelines further state that the Cost Inflation Index (CII) should be used to determine the estimated indexed cost of acquisition wherever applicable.
Four key data files prescribed
The SFT reporting framework requires information to be provided through prescribed data files.
These include:
- DEP_BATCH.TXT - Details of the reporting entity, principal officer and uploaded files.
- DEP_ACC_SUMM.TXT - Details of demat account holders and summary values for the reporting period.
- DEP_TRN_SUMM.TXT - Security-level transaction summary for sales/debits.
- DEP_OFF_TRN.TXT - Details of off-market transactions recorded by the depository.
The account summary file, for example, captures information such as PAN, client name, client type, opening value, market purchases, market sales, off-market transactions, IPO credits, corporate actions, pledge invocation and closing value.
Detailed transaction-level information required
The transaction summary requires reporting of several details, including:
- Client PAN and name
- Security class and security code
- Security name
- Debit date
- Debit and credit type
- Asset type - short-term or long-term
- Units sold or transferred
- Weighted average unit price
- Estimated sale consideration
- Estimated cost of acquisition
- Fair market value as on January 31, 2018, where applicable
- Adjusted FMV and adjusted cost of acquisition
- Indexed cost of acquisition, wherever applicable
- Purchase flag indicating whether the purchase was made before or on/after February 1, 2018.
Off-market transactions also covered
The reporting framework separately captures off-market transactions .
The prescribed information includes the transfer date, transferor and transferee DP and client details, PAN, names, security details, quantity transferred, reported consideration, end-of-day price, estimated transaction value and the reason for the transfer.
The permissible transaction reasons cover situations such as gifts or donations, transfers between specified family members, account closure, ESOP transfers, transfers to or from PMS accounts, mergers or demergers, on-market and off-market sales, buy-backs, transfers to one's own account and transmission to legal heirs.
Data validation and rejection rules
The CBDT has also prescribed validation rules for SFT submissions.
Errors have been categorised into:
- Errors - schema-level issues that need to be resolved for successful generation of the report.
- Defects - issues requiring correction and resubmission.
- Exceptions - information that needs to be reviewed by the reporting entity and corrected where necessary.
Examples of validation issues include mismatch in control statement values, incorrect sequence numbers, missing account summary data, blank mandatory fields, invalid PANs, excessive values and mismatches identified against other submitted data.
Information security obligations
Reporting entities are also required to document and implement appropriate information security policies and procedures , with clearly defined roles and responsibilities for protecting submitted information and related documents.
They must also maintain suitable archival and retrieval policies so that the submitted information and documents remain readily available to competent authorities when required.
What this means for taxpayers
The new SFT framework is significant because the information reported by depositories will feed into the tax department's information ecosystem and support pre-filling of capital gains-related information in income-tax returns.
For taxpayers, the practical takeaway is that transaction details appearing in the AIS should be checked against their own demat, broker and investment records. Since the guidelines themselves permit taxpayers to modify estimated sale consideration and cost of acquisition before filing the return, the information provided through SFT should not be treated as a substitute for the taxpayer's own verification.
For depositories and other reporting entities, the notification brings a more structured reporting mechanism covering data formats, reporting frequency, transaction classification, capital-gain computation inputs, corrections, deletions and validation requirements.
The notification takes effect from the date of its issue.
FAQs
Q1. What is the latest CBDT notification about?
The notification prescribes the format, procedure and guidelines for furnishing SFT relating to depository transactions under the Income-tax Act, 2025.
Q2. How frequently will SFT for depository transactions be filed?
The SFT will be furnished on a half-yearly basis , with reporting periods ending September 30 and March 31.
Q3. What are the SFT due dates?
The first-half SFT is due by October 31 , while the second-half SFT is due by April 30 .
Q4. Will SFT information be visible to taxpayers?
Yes. Reporting entities are required to provide the information reported to the Income Tax Department to the account holder to facilitate reconciliation with the AIS.
Q5. Can taxpayers correct the SFT information?
The guidelines state that taxpayers will be able to modify estimated sale consideration and cost of acquisition before filing their return.
Q6. Which method is used to identify the corresponding purchase for a sale?
The FIFO (First in First Out) method is prescribed for identifying the corresponding credit transaction and determining the holding period.
Q7. Does the SFT framework cover off-market transactions?
Yes. A separate DEP_OFF_TRN.TXT file is prescribed for reporting off-market transactions recorded by the depository.
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