Please check SFT entries in your 26AS
This is something important with respect to your IT return filing. Please go through and ignore if it is not applicable to you. But please read through once.
This year onwards 26AS statement of the tax payers comes with a set of few new items, SFT - Statement of Financial Transactions. These are in the nature of uncommon / unusual transactions in tax payers’ accounts during the financial year. While there are multiple categories in it, the most common I found amongst it for a common tax payer is SFT 005 – Time Deposits (e.g. fixed deposits in bank/co-operative bank/NBFC etc.).
The rule is to report – “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.” To put it in simple words, the department asks the bank to give information about the new (and NOT Renewal) fixed deposits made by a person during financial year if the total of new deposits exceeds Rs. 10 Lakhs.
Now, since this reporting has been started not so long ago, the reporting entities are also new to this kind of reporting and hence mistakes are bound to happen. Same case happened with my relative, who is a senior citizen. He holds some term deposits in a well known bank and every year appropriate tax is deducted by the bank and deposited to the department. This year, however, while preparing his return for filing, I observed in 26AS that, while filing SFT 005 - Time Deposits, the bank has by mistake reported fresh deposits of Rs 53 lakhs plus , which is not the fact. He did not make any fresh deposits this year. After noting this mistake, this was brought to the Bank's notice around October 21/22, 2020. Thereafter the bank filed the revised return, however the same did not get reflected in the 26AS for around 2 weeks. So I approached the bank again, where I got to know that there was an error in the revised return by the bank, hence the return did not get uploaded itself. Then after repeated follow ups, the bank filed the revised return on 2nd December, but alas, till date (23rd December) the incorrect entries are still appearing in 26AS. Now we (I and the Bank) have approached IT Dept again along with the proof of revised return, and hope that the issue gets resolved soon.
Now, even if the bank was negligent and did not handle this matter promptly as well as properly, I would not blame them for their mistake in filing the SFT information for the first time. Nor will I blame any other organisation who is reporting other categories of entries for the same reason. Since, they are new to this reporting, I will give them a benefit of doubt.
My intention of writing this is that one should be careful about such things. I understand that today is 23rd December and only a week is remaining till deadline of filing of IT returns. But please do check your 26AS before filing your return. Show it to your CA/tax advisor, he/she will guide you properly. If you have not filed your return and if you think there is an erroneous entry in your 26AS, you can still approach the bank/reporting entity, try to get it corrected before filing the return. If you have already filed the return, still it’s better to check whether there is any such erroneous entry appearing. The reason behind this is that today or tomorrow, there are good chances that you will get a notice from the IT department asking you to explain the transaction and you will need to get it rectified anyway that time, so why waste time right now?
The purpose of this write up is not to frighten anybody but to make one aware about the new things. Very rarely this kind of thing happens. Most of you reading may not have any problem in your statement. But this is my sincere attempt to caution the people.
Bipin Palande