The Income Tax department is carrying out spot Inspection of the offices of the Sub-registrars across Karnataka verifying the registers and other documents maintained at the offices. During the course of this action, sale transactions totalling more than Rs 10,000 crores pertaining to FY 2022-23 were found to be not reported by the filing of the required Statement of Financial Transaction by these offices. The Government of India along with the Ministry of Finance has been striving towards curbing black money and also widening the tax base and has taken numerous initiatives in this regard. One such initiative was to cast an obligation on government agencies and other authorities who are a valuable and reliable source of information to report high value transactions. 

Such specified persons are required to submit Statement of Financial Transactions (SFTs) annually.  The Sub Registrars who are possessing valuable information about the transaction of properties are required to submit the SFT-12 in Form 61A annually within the prescribed due date. However it is noticed that these SFTs are not being filed regularly and major defects are noticed in the SFTs filed by these agencies. 

One of the Sr. official of the Intelligence and Criminal Investigation Division of the Income Tax department, who choose to not to reveal the identity and who is also a part of such an Inspection team says, “There are many Sub-registrar offices (SROs) in Bangalore that are not complying with the provisions of  SFT filing for property transactions. The SFT reporting to the income tax department is one of the main duties of an SRO which is being neglected on the back of insufficient manpower”.

It was added, “For any particular financial year, the SROs should file the relevant SFT by the end of 31st May succeeding the end of that Financial year. Since the past 3-4 years, despite issuing notices and reminders, the concerned SROs have not taken any steps in this regard. Hence, we have come here for an inspection, keeping in view the list of all the past five years' transactions. They will have to refile the whole thing again”.

The clock is ticking, and the SROs, who are the Reporting Entities are urged to take immediate action and avoid unnecessary penalties, complying with income tax regulations. For those filing belated SFTs, penalty will be levied as applicable under the Income Tax Department’s section.

In order to streamline the errors and help the SROs overcome the challenges faced in the SFT filings, the Income Tax department has been taking several measures to conduct extensive outreach programs regularly. Even for other Reporting Entities like Banks, Co-operative Banks, Depositories, Foreign Exchange dealers etc. who need to file SFT regularly Income Tax Department regularly organises outreach/online interactive sessions, to guide them and address various issues faced by these REs in the filing of SFTs. Then, to familiarize with the changes, gathering necessary information/documents and filing SFTs with greater precision is the only way out for the SROs to streamline the obligation cast upon them regarding the high-value transactions involved in the property transactions.