Form 61B Income Tax: Applicability, Filing Process, and Requirements

Transparency and cross-border cooperation are important in tackling tax evasion and ensuring compliance. To align with international tax information-sharing standards such as FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard), the Indian Income Tax Department introduced Form 61B. 

Form 61B Income Tax is a vital instrument that enables specified financial institutions to report financial transactions of account holders who may be residents of other countries.

In this article, we will explore the applicability, filing procedures, and penalties related to Form 61B Income Tax. We’ll also explain how financial institutions must comply with this regulation, how the process ties into direct tax laws, and its relevance to income tax calculation on salary.

What is Form 61B?

Form 61B is a prescribed statement that financial institutions in India must file under Section 285BA of the Income Tax Act, 1961. It is filed annually and submitted online through the Reporting Portal maintained by the Income Tax Department.

Purpose of Form 61B Under the Income Tax Act

The purpose of Form 61B is two-fold:

• Compliance with International Standards: India is a signatory to FATCA and the Common Reporting Standard (CRS).
  
• Strengthening Tax Enforcement: The data collected through Form 61B allows Indian tax authorities to monitor transactions and detect undisclosed income, enhancing the enforcement of direct tax laws.

Applicability of Form 61B

Entities Required to File Form 61B

The obligation to file Form 61B lies with Reporting Financial Institutions (RFIs), which include:

• Banks and cooperative banks
  
• Mutual funds
  
• Insurance companies (life insurance)
  
• Depository institutions
  
• Custodial institutions
  
• Investment entities (including certain stock advisory services)

These entities must be registered with the Income Tax Department’s Reporting Portal and possess a valid Global Intermediary Identification Number (GIIN), which is issued by the US IRS under FATCA provisions.

Financial Institutions and Reporting Standards

A financial institution must assess its classification under FATCA and CRS. If deemed a Reporting Financial Institution, it must:

• Conduct due diligence on account holders
  
• Identify reportable accounts (non-resident individuals and entities)
  
• Report relevant data through Form 61B

This reporting mechanism ensures transparency and accountability in international financial dealings.

Link to FATCA and CRS Reporting Requirements

The roots of Form 61B Income Tax lie in international cooperation. Under FATCA, financial institutions are required to report US citizens’ and residents’ financial accounts. CRS, developed by the OECD, is broader in scope and mandates reporting of financial accounts held by tax residents of all participating countries.

India has committed to both, and Form 61B facilitates the actual reporting as mandated under Rule 114G of the Income Tax Rules.

Reporting Under Form 61B

What Needs to Be Reported?

Form 61B requires reporting of various categories of financial accounts held by non-resident individuals and entities, provided these accounts meet the reportable criteria set out in FATCA and CRS.

The following must be reported:

• Financial account information
  
• Personal details of the account holder
  
• Account balance or value at year-end
  
• Gross interest or dividend paid
  
• Sale or redemption proceeds

Types of Financial Accounts and Transactions

The reporting includes:

• Depository Accounts (e.g., savings or current accounts)
  
• Custodial Accounts (securities and financial instruments)
  
• Cash Value Insurance Contracts
  
• Equity and Debt Interest in Investment Entities

These transactions are monitored for tax compliance and may indirectly impact calculations such as income tax calculation on salary or professional tax liabilities, particularly for NRIs and global professionals.

Annual Information Return Requirements

Form 61B Income Tax is part of the Annual Information Return (AIR) regime for specified financial transactions. It complements other reporting obligations under Rule 114E (Form 61A), ensuring comprehensive data sharing by entities with significant financial activity.

Contents and Details Required in Form 61B

Entity Information and GIIN (Global Intermediary Identification Number)

Each reporting entity must furnish:

• Name of the institution
  
• GIIN (mandatory for FATCA)
  
• PAN and TAN
  
• Address and contact details
  
• Reporting period

This forms the header portion of Form 61B.

Account Holder Details

This section includes:

• Full name of the account holder
  
• Country of tax residence
  
• Tax Identification Number (TIN)
  
• Date and place of birth
  
• Type of account (individual/entity)

Institutions must perform due diligence to determine whether the account holder is a reportable person under CRS or FATCA.

Financial Information to Be Reported

The following data points are required:

• Account number
  
• Account balance or value at year-end
  
• Interest/dividends credited
  
• Sale/redemption proceeds of investments

These details enable tax departments across jurisdictions to assess whether income has been appropriately disclosed under direct tax regulations.

Timeline for Filing Form 61B

Filing Due Dates for Different Reporting Years

The due date for filing Form 61B is typically 31st May of the following financial year. For example, for transactions in FY 2025-26, the form must be filed by 31st May 2026.

Consequences of Late Filing

Failure to file Form 61B by the due date can lead to:

• Penalty of ₹10,000 per day of default
  
• Scrutiny by tax authorities
  
• Suspension of GIIN
  
• Potential loss of reputation and regulatory sanctions

The penalties are governed by Section 271FA of the Income Tax Act.

How to File Form 61B

Preparation of Statement in Prescribed Format

Before submission, institutions must prepare the data in an XML schema as prescribed by the Income Tax Department. The schema includes:

• Entity-level data
  
• Account-holder level information
  
• Financial data section

It is recommended to use official utilities or validated third-party software to avoid schema mismatches or errors.

Login and Submission on Reporting Portal

Steps include:

1. Register on Reporting Portal
   
2. Log in using TAN credentials
   
3. Upload the XML file
   
4. Digital Signature Certificate (DSC) is mandatory for authentication
   
5. Submit the report and download acknowledgment

The system performs initial validations and generates a Unique Acknowledgment Number.

Acknowledgment and Error Correction Procedure

In case of validation errors:

• The system issues a Submission Status along with error descriptions
  
• Corrections can be made in the XML file and re-uploaded
  
• Revised Form 61B can be submitted if errors are discovered after filing
  

This process helps ensure reporting accuracy, crucial for global tax coordination and regulatory integrity.

Penalty for Non-Compliance

Penalties for Delay or Incorrect Filing

Non-compliance with Form 61B filing requirements can lead to:

• ₹10,000/day for late filing
  
• Additional penalty of ₹50,000 for incorrect information under Section 271FAA
  
• Possible revocation of GIIN registration, leading to further reporting hurdles

Such penalties underscore the seriousness of cross-border financial information sharing.

Penalty Structure Under Income Tax Rules

The penalty structure under the Income Tax Rules for non-compliance with Form 61B is stringent, reflecting the importance of accurate and timely reporting of financial transactions by reporting entities. 

Under Section 271FAA of the Income Tax Act, if a reporting entity provides inaccurate information in Form 61B, such as misreporting, failure to furnish required details, or non-submission of the form within the prescribed timeline, a penalty of ₹50,000 may be levied. 

Additionally, under Section 271GB, failure to furnish Form 61B as mandated can attract penalties ranging from ₹5,000 to ₹50,000 per day, depending on the nature and duration of the default.

Conclusion

The filing of Form 61B plays a critical role in India’s commitment to global tax transparency.

For financial institutions, stock brokers, insurers, and stock advisory services, adhering to Form 61B requirements safeguards regulatory compliance and client trust.

As global financial ecosystems become more interconnected, Form 61B Income Tax acts as a cornerstone of trustworthy tax governance. It reinforces the credibility of Indian financial entities on the world stage.

FAQs

Is Form 61B applicable to all banks and financial institutions?

No, Form 61B is applicable only to Reporting Financial Institutions (RFIs) as defined under Rule 114F. These include banks, depository institutions, certain insurance companies, and investment entities dealing with reportable accounts under FATCA and CRS.

Can Form 61B be revised after submission?

Yes, revised Form 61B can be submitted if errors are found post-submission.

What happens if a reporting entity fails to register on the reporting portal?

Failure to register results in the inability to file Form 61B. This can attract regulatory penalties under Section 271FA and even disqualification from FATCA/CRS compliance lists.

Is FATCA and CRS reporting mandatory through Form 61B?

Yes. For India, Form 61B is the official vehicle for reporting under both FATCA and CRS. Filing this form annually is mandatory for all reporting financial institutions subject to international reporting standards.

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