SFT Submission Format and Guidelines for Mutual Funds by RTAs

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DGIT(S)/ADG(S)-2/Reporting Portal/2021/180

Government of India Ministry of Finance Central Board of Direct Taxes Directorate of Income Tax (Systems)

Notification No. 4 of 2021 New Delhi, 30th April, 2021

Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Mutual Fund Transactions by Registrar and Share Transfer Agent

Section 285BA of the Income Tax Act, 1961 and Rule 114E requires specified reporting persons to furnish statement of financial transaction (SFT). 2. For the purposes of pre-filling the return of income, CBDT has issued Notification No. 16/2021 dated 12.03.2021 to include reporting of information relating to Capital gains on transfer of units of Mutual Funds. The new sub rule 5A of rule 114E specifies that the information shall be furnished in such form, at such frequency, and in such manner, as may be specified by the Director General of Income Tax (Systems), with the approval of the Board. 3. The guidelines for preparation and submission of Statement of Financial Transactions (SFT) information are enclosed in Annexure A and Annexure B respectively. The format of control statement to be submitted by the Designated Director is given in Annexure C. The data structure and validation rules are enclosed in Annexure D and Annexure E respectively. Notification No. 3 of 2018 dated 05.04.2018 may be referred for the procedure for registration. 4. All Registrar and Share Transfer Agents are required to prepare the data file in prescribed format from their internal system. Reporting entities are required to submit the data files using SFTP Server using the login credentials (To be communicated separately). 5. A separate control statement (refer annexure C) is required to be signed, verified and furnished by the Designated Director. 6. The statement of financial transactions relating to Financial Year 2020-21 shall be furnished on or before the 31st May 2021. Thereafter, the statement of financial transactions relating to the quarter ending 30th June, 31st September, 31st December and 31st March shall be furnished on or before 25th of July, October, January and April respectively. 7. The reporting entities are also required to provide information of mutual fund transactions, reported to Income Tax Department, to the account holder which will enable taxpayers to reconcile the information displayed in the Annual Information Statement (AIS) (Form 26AS).

Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Mutual Fund Transactions by Registrar and Share Transfer Agent

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8. 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.
9. The reporting person/entity is required to document and implement appropriate information security policies and procedures with clearly defined roles and responsibilities to ensure 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.
10. This issues with the approval of CBDT. This Notification shall come into effect from the date of issue.

Copy to:

1. PPS to the Chairman and Members, CBDT, North Block, New Delhi.
2. All Pr. Chief Commissioners/ Pr. Director Generals of Income Tax and all Chief Commissioners/ Director Generals of Income Tax — with a request to circulate amongst all officers in their regions/ charges.
3. JS (TPL)-I &2/ Media coordination and Official spokesperson of CBDT
4. DIT (IT)/ DIT (Audit)/ DIT (Vig.)/ ADG (System) 1, 2, 3, 4, / CIT (CPC) Bangalore, CIT (CPC- TDS) Ghaziabad.
5. ADG (PR, PP&OL) with a request for advertisement campaign for the Notification.
6. TPL and ITA Divisions of CBDT.
7. The Institute of Chartered Accountants of India, IP Estate, New Delhi.
8. Web Manager, "incometaxindia.gov.in" for hosting on the website.
9. Database cell for uploading on www.irsofficersoniine.zov.in and in DGIT (S) Comer.
10. ITBA publisher for uploading on ITBA portal.

ADG(Systems)-2, CBDT

Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Mutual Fund Transactions by Registrar and Share Transfer Agent

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Annexure A Guidelines for Preparation of Statement of Financial Transactions (SFT) The guidelines for preparation of Statement of Financial Transactions (SFT) for Mutual Fund transactions are as under:

1. The Mutual Fund transaction summary file will be used for pre-filling the gain/income/loss from Mutual Fund transactions.
2. The Mutual Fund Transaction Summary is required to be prepared for user- initiated debit transactions during the reporting period. For debits through transfers, information need not be provided if transferor and transferee are same person.
3. In case of a minor, details of legal or natural guardian (PAN, Name etc.) may be provided.
4. Data with respect to exchange traded funds and exchange-based transactions, , may not be provided.
5. The Estimated Sale Consideration for the debit transaction should be determined on the best possible available price of the asset with the RTA. In case the sale consideration related to a sale/transfer is not available, Redemption Offer Price (Exit Load adjusted NAV) on the date of sale/transfer may be taken. The taxpayer will be able to modify the sales consideration before filing the return.
6. The securities should be classified into specified security class for determining the type of asset (short term/long term) and applicable rate.
7. The period of holding (difference between date of sale and date of acquisition of any security) should be used to classify the asset as short term or long-term asset. First in First out (FIFO) method should be used for identification of corresponding purchases and computation of period of holding. Any capital asset held by the taxpayer for a period of more than minimum period of holding will be treated as long-term capital asset and remaining assets will be classified as short-term asset. The specified minimum period of holding for different asset class is as under:

Security Class Code Security Class Description Minimum Period of Holding EMF Unit of Equity Oriented Mutual Fund 12 months UTI Unit of UTI 12 months OTU Other Units 36 months

8. For every debit transaction, the corresponding credit 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 RTA. In case the cost of acquisition related to a credit/transfer is not available, NAV for the end of the day of the credit may be taken. The taxpayer will be able to modify the cost of acquisition before filing the return.

Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Mutual Fund Transactions by Registrar and Share Transfer Agent

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9. In relation to a long-term capital asset, being a unit of an equity-oriented fund acquired before the 1st day of February, 2018, adjusted cost of acquisition shall be higher of (i) the cost of acquisition of such asset; and (ii) lower of (A) the fair market value of such asset as on 31st January, 2018; and (B) the full value of consideration received or accruing as a result of the transfer of the capital asset.
10. The Cost Inflation Index should be used to determine estimated indexed cost of acquisition wherever applicable.
11. The details of clients and summary values for the transactions for the reporting period should be reported in MF Account Summary (MF_ACC_SUMM.TXT)
12. The details of transactions effected through transmission and recorded by the RTA during the year along with off-market transactions recorded in the RTA system should be reported in Mutual Funds Off-Market Transactions (MF_OFF_TRN.TXT)