The government has urged reporting entities to ensure timely, accurate and complete filing of Statements of Financial Transactions (SFTs) ahead of the May 31 deadline for FY 2025–26. Central Board of Direct Taxes Officials told NDTV Profit that poor-quality filings may create avoidable inconvenience for taxpayers and weaken the effectiveness of the data-driven tax system.
Reporting entities such as banks, cooperative banks, mutual funds, companies, property registrars and foreign exchange dealers are required to file these statements under Section 285BA of the Income-tax Act, 1961, read with Rule 114E of the Income-tax Rules. The framework is designed to strengthen transparency and improve compliance.
The tax department has flagged several common errors in SFT filings, including incorrect or missing PAN details, duplicate reporting of transactions, inaccurate transaction values particularly in joint accounts, and inadequate reconciliation of data before submission. Delays in filing and weak quality checks have also been identified as recurring issues.
CBDT Officials have said that such errors can lead to mismatches in Annual Information Statement (AIS), resulting in confusion for taxpayers and unnecessary compliance follow-ups. Even small inaccuracies in reporting can create disproportionate issues once the data is reflected in taxpayer statements.
To address these concerns, the government has urged reporting entities to strengthen internal validation systems, ensure PAN verification, and carry out proper reconciliation of transaction data before submission. Regular quality checks and timely filing have also been emphasised as essential steps.
Officials have reiterated that accurate SFT reporting is critical for maintaining a transparent and taxpayer-friendly compliance ecosystem. The CBDT has also highlighted the importance of continuous engagement with reporting entities to improve data quality and reduce errors.
Officials from the Central Board of Direct Taxes said that reporting entities remain critical partners in strengthening India's tax transparency framework. Continuous outreach and stakeholder engagement programmes are being conducted to improve awareness and reduce filing errors.
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