SFT Reporting on Issue of Shares for Private Limited Company
Raising share capital is common for startups and private limited companies. However, many founders, directors, and finance teams are unaware that receipt of ₹10 lakh or more from a single investor triggers mandatory SFT reporting under the Income-tax Act, 1961. If your company has issued shares during the financial year, this guide will help you understand whether Form 61A (SFT filing) is required. 📌 What is SFT (Statement of Financial Transactions)? SFT stands for Statement of Financial Transactions, governed by: It requires reporting of specified high-value financial transactions to the Income Tax Department. 📌 Is SFT Applicable on Issue of Shares by Private Companies? Yes. A company in which the public are not substantially interested (i.e., Private Limited Company) must report: Receipt from any person of ₹10 lakh or more in a financial year for acquiring shares (including share application money). Important Clarification 📊 Example – When SFT Filing Becomes Mandatory Investor Amount Invested SFT Filing Required? Mr. A ₹15,00,000 ✅ Yes Mrs. B ₹8,00,000 ❌ No Mr. C ₹12,00,000 (3 tranches) ✅ Yes If any investor crosses ₹10 lakh → Form 61A filing is mandatory. 📌 Which SFT Code is Used for Share Capital? Under the current reporting utility: 👉 SFT-008 – Purchase of Shares Though the description says “purchase”, it includes: 📅 Due Date for SFT Filing Form 61A must be filed on or before: 31st May following the financial year Example: Late filing attracts penalty under Section 271FA. ⚠️ Penalty for Non-Filing of SFT Under Section 271FA: Failure to file may also trigger: How to File SFT for Issue of Shares? Step-by-step process: ❌ Common Mistakes in SFT Reporting for Share Capital 🏢 Why Startups & Private Companies Must Not Ignore This Compliance Many startup founders assume SFT applies only to banks. This is incorrect. If your company: You must review SFT applicability before 31 May. Proper compliance ensures: ✔ No penalty exposure✔ Clean AIS record for investors✔ Reduced scrutiny risk✔ Strong governance framework 📌 Final Takeaway If your private limited company received ₹10 lakh or more from any investor during a financial year, SFT filing in Form 61A is mandatory. Proactive compliance avoids unnecessary penalties and departmental notices. 📞 Need Assistance with SFT Filing? At BizGuardian, we assist private limited companies, startups, and growing businesses with: 📧 Email: support@bizguardian.in📱 Mobile: 9003009901 / 9003009902🌐 Website: www.bizguardian.in Avoid last-minute penalties. Ensure compliant capital raising.