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For the purposes of prefilling the return of income, CBDT has issued a Notification to include reporting of information relating to dividend income. Section 285BA of the Income Tax Act, 1961 and Rule 114E requires specified reporting persons to furnish statement of financial transaction (SFT). The new sub-rule 5A of rule 114E specifies that the information needs to be furnished in the prescribed form. The statement of financial transactions shall be furnished on or before the 31 st May, immediately following the financial year in which the transaction is registered or recorded.
The guidelines for preparation and submission of Statement of Financial Transactions (SFT) information and the data structure and validation rules have been issued by CBDT. The reporting entities are required to prepare the data file in the prescribed format from their internal system. An excel-based report preparation utility has also been provided to assist small reporting entities in preparing data file.
The reporting entities such as banks are advised to provide information of dividend income and interest income reported to the Income Tax Department, to the taxpayers which will enable them to reconcile the information displayed in the Annual Information Statement (AIS) (Form 26AS).
In case, the reporting person/entity comes to know or discovers any inaccuracy in the information provided in the statement or the defects have been communicated to the reporting person/entity, it is required to remove the defects by submitting a correction/deletion statement.
The reporting person/entity is required to document and implement appropriate information security policies and procedures with clearly defined roles and responsibilities to ensure the security of submitted information and related information/documents. The reporting person/entity is also required to document and implement appropriate archival and retrieval policies and procedures with clearly defined roles and responsibilities to ensure that submitted information and related information/documents are available promptly to the competent authorities.
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