SFT And TDS Data Are Major Sources Of Tax Officials

Hyderabad: Officials of the Directorate of Income-Tax (intelligence and criminal investigation) said statement of financial transactions (SFT) data, along with tax deducted at source (TDS) information, remains a key source for the income-tax department.

At an awareness programme held under ‘Prarambh’, jointly organised by the Institute of Chartered Accountants of India, Hyderabad branch, and the income-tax department, marking the commencement of the Income-Tax Act, 2025, officials stressed the importance of SFT reporting under revised rules.

L. Vijaya Bhaskara Reddy, director of income-tax (I&CI), Hyderabad, and P. Sankar Pandi, additional director, said SFT filings by reporting entities directly impacted tax administration and taxpayers. They noted that error-free reporting would benefit taxpayers, the department and reporting entities, while reducing the need for intrusive action.

Officials called on chartered accountants to understand revised reporting requirements and make necessary changes in software systems, transaction modules and validation processes to ensure compliance. They outlined key changes, including reduction of redundant data fields, higher reporting thresholds, simplified forms and fewer interpretational issues.

A presentation during the programme detailed revisions in thresholds, PAN requirements, handling of non-PAN transactions and new forms applicable across reporting entities such as banks, companies and hotels or convention centres.

The programme also highlighted common defects in SFT filings arising from manual data extraction and weak validation systems. Chartered accountants were advised to strengthen PAN validation and improve transaction-level data capture. Officials said compliance must begin at the stage of recording transactions rather than at the time of filing SFTs.