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Depository Institutions submit statements of financial transactions on a half-yearly basis with effect from 1st April 2023. The update modifies guidelines for estimated sale consideration, cost of acquisition, holding period remarks, security classes, and adds a new purchase flag data field.
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Corrigendum to Notification No.3. of 2021 Government of India Ministry of Finance Central Board of Direct Taxes Directorate of Income Tax (Systems) Corrigendum to Notification No. 3. of 2021 New Delhi, 15/11/2023 Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFTl for Depository Transactions. The format, procedure, and guidelines for submission of information relating to capital gains on transfer of listed securities or units of mutual funds by Depository Institutions was notified vide notification no. 3 of 2021 dated 30th April 2021 as per the mandate of Section 28SBA of the Income Tax Act, 1961 and Rule 114E sub-rule SA. The notification lists various files, file formats, data types for different data fields that need to be reported, and various DQ rules that should be validated by Depository Institutions before submission of the data.
Subsequently, discussions were held with representatives of Depository Institutions. Accordingly, following changes are made to the said notification.
The S.No. 6 of the existing notification mentions the following "The statement offinancial transactions relating to Financial Year 2020- 21 shall be furnished on or before the 31 st May 2021. Thereafter, the statement of financial transactions relating to the quarter ending 30th June, 31 st September, 31 st December and 31 st March shall be furnished on or before 25th of July, October, January and April respectively. » This should be read as following: "With effect from 1st April 2023 the statement of financial transactions data will be submitted on half yearly basis instead of existing quarterly basis i.e. data relating to 1st half of the Financial Year ending 30th September and remaining half of the FinanCial Year ending on 31 st March shall be furnished on or before 31 s t of October and 30th of April respectively. "
In annexure A (Guidelines for Preparation of Statement of Financial Transactions (SFT)) of the existing notification, S.No.3 mentions the following: "The Estimated Sale Consideration for the debit transaction should be detennined on the best possible available price of the asset with the
Corrigendum to Notification No.3. of 2021 depository (e.g. end of day price). The taxpayer will be able to modify the sales consideration before filing the retum. " This should be read as following: "The Estimated Sale Consideration for the debit transaction should be determined on Weighted Average Price i.e., taking into actual value of the transactions executed. The taxpayer will be able to modify the sales consideration before filing the return."
S. In annexure A (Guidelines for Preparation of Statement of Financial Transactions (SFT)) of the existing notification, S.No.S mentions the following:
| Security Class Code | Security Class Description | Minimum Period of Holding |
|---|---|---|
| LES | Listed Equity Share | 12 months |
| LPS | Listed Preference Share | 12 months |
| lOB | Listed Debenture | 12 months |
| ZCB | Zero Coupon Bond | 12 months |
| CIB | Listed Capital Indexed Bond | 12 months |
| EMF | Unit of Equity Oriented Mutual Fund | 12 months |
| UTI | Unit of UTI | 12 months |
| UBT | Unit of Business Trust | 36 months |
| OTU | Other Units | 36 months |
| OTH | Other Listed Securities (Other than a unit) | 12 months |
This should be read as following:
| Security Class Code | Security Class Description | Minimum Period of Holding | Remarks |
|---|---|---|---|
| LES | Listed Equity Share | 12 months | - |
| LPS | Listed Preference Share | 12 months | - |
| LDB | Listed Debenture | 12 months | - |
| ZCB | Zero Coupon Bond | 12 months | - |
| ClB | Listed Capital Indexed Bond | 12 months | - |
| EMF | Unit of Equity Oriented Mutual Fund | 12 months | - |
| UTI | Unit of UTI | 12 months | Where more than 35% of its total proceeds are invested in the equity shares of domestic companies, this information should be provided.
Note: Where not more than 35% of its total proceeds are invested in the equity shares of domestic companies, (Specified Mutual Fund), it will always be classified as short-term capital asset (Applicable from 1st April 2023) |
| UBT | Unit of Business Trust | 36 months | Where more than 35% of its total proceeds are invested in the equity shares of domestic companies, this information should be provided.
Note: Where not more than 35% of its total proceeds are invested in the equity shares of domestic companies, (Specified Mutual Fund), it will always be classified as short-term capital asset (Applicable from 1st April 2023) |
| OTU | Other Units | 36 months | Where more than 35% of its total proceeds are invested in the equity shares of domestic companies, this information should be provided.
Note: Where not more than 35% of its total proceeds are invested in the equity shares of domestic companies, (Specified Mutual Fund), it will always be classified as short-term capital asset (Applicable from 1st April 2023) |
| OTH | Other Listed Securities (Other than a unit) | 12 months | - |
| MLD | Market Linked Debenture | - | Short-Term Capital Assets (w.e.f. 1st April 2024) |
Corrigendum to Notification No.3. of 2021 6 . In annexure A (Guidelines for Preparation of Statement of Financial Transactions (SFT)) of the existing notification, S.No.6 mentions the following: "For every debit transaction, the corresponding credit transaction should be identified using First in First Out (FIFO) method. The estimated cost of acquisition for the credit should be determined on the best possible available price with the depository. The cost of acquisition can be estimated as per the closing rate on the date (T-2) of transaction for market purchase. The estimated cost of acquisition is to be taken as NIL for OFF Market purchase, [PO or Corporate Action or for any transaction through other than Exchange. The taxpayer will be able to modify the cost of acquisition before filing the return. » This should be read as following: "For every debit transaction, the corresponding credit transaction should be identified using First in First Out (FIFO) method. The estimated cost of acquisition for the credit should be determined on weighted average price of the asset i.e taking into actual value of the transactions, if purchase was made after l·t February 2018 or End of the day price, if purchase was made before 1st February 2018, available with the depository. The estimated cost of acquisition is to be taken as NIL for OFF Market purchase, Corporate Action or for any transaction through other than Exchange. IPO credit will be treated as Market credit and cost of the acquisition of the same will be arrived using the formula i.e. Number of shares allotted x Per unit price at which share is allotted. The taxpayer will be able to modify the cost of acquisition before filing the return."
