The Income Tax Department has introduced Draft Form No. 165, a comprehensive statement format for reporting Specified Financial Transactions (SFT) under Section 508(1) of the Income-tax Act, 2025.
The draft form lays out detailed reporting requirements for financial institutions, reporting entities, and intermediaries, signalling a sharper focus on tracking high-value transactions, property deals, and account-level financial activity.
What Is Draft Form No. 165?
Draft Form No. 165 is designed as a structured reporting statement that captures granular transaction data across multiple categories, including:
- Person-based financial transaction reporting
- Bank and post office account reporting
- Immovable property and stamp paper transactions
- Aggregate transaction summaries
The form is divided into multiple parts (A to D), each focusing on different reporting dimensions to ensure comprehensive financial disclosure.
Key Highlights of the Draft Form
1. Detailed Reporting Entity Information
The form requires reporting entities to provide identification details, statement type, reporting period, and principal officer information, ensuring accountability at the organizational level.
2. Person-Based Transaction Reporting
Entities must report detailed information of individuals or entities involved in financial transactions, including:
- PAN or Aadhaar details
- Address and contact information
- Transaction aggregates
- Joint transaction details
This section aims to improve the traceability of financial flows.
3. Financial Transaction Summary
The form captures aggregate gross amounts received, paid, and received in cash, enabling authorities to monitor high-value and cash-intensive transactions more effectively.
4. Account-Based Reporting
Banks and post offices will need to report account details such as:
- Account type and status
- Cash credits and debits
- Account holder relationships
This aligns with global best practices for financial reporting and anti-evasion monitoring.
5. Immovable Property Transaction Reporting
A dedicated section requires reporting of property transactions, including:
- Transaction amount and date
- Property type and location
- Stamp valuation
- Cash component
The form also references reporting related to stamp paper values applicable to Stock Holding Corporation of India Ltd.
Why This Matters
The introduction of Draft Form 165 reflects the government’s broader push toward data-driven tax administration under the new tax regime. By standardizing reporting formats and expanding data capture, authorities aim to:
- Detect tax evasion more efficiently
- Improve compliance monitoring
- Enhance financial transparency
- Strengthen risk assessment systems
Who Will Need to File?
The form is expected to be applicable to reporting entities such as:
- Banks and financial institutions
- Post offices
- Registrars and property reporting authorities
- Other notified reporting entities
They will be required to submit statements for each reporting period with detailed transaction-level information.
Compliance Impact for Taxpayers and Institutions
Experts say the draft format indicates stricter reporting standards and may require institutions to upgrade systems for data collection and validation. Taxpayers involved in high-value transactions may also see increased scrutiny due to enhanced reporting granularity.
What Happens Next?
Since the form is currently in draft stage, stakeholders may provide feedback before final notification. Once finalized, Draft Form No. 165 will become a key compliance document under the Income-tax Act, 2025 reporting framework.
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