CBDT Notifies SFT Reporting Rules for Mutual Fund Transactions by RTAs
The Central Board of Direct Taxes (CBDT) has introduced detailed guidelines for reporting mutual fund transactions under Statement of Financial Transactions (SFT) by Registrar and Transfer Agents (RTAs).
The framework has been notified under Section 508(1) of the Income-tax Act, 2025, read with Rule 237(6) of the Income-tax Rules, 2026. The notification prescribes the format, procedure, data structure and validation requirements for reporting mutual fund transaction information.
Who Has to Report ?
The reporting requirement primarily applies to SEBI-registered Registrar and Transfer Agents (RTAs) handling mutual fund transactions.
The information will be furnished through the prescribed SFT-2518 reporting mechanism. The objective is to provide the Income Tax Department with structured transaction-level information that can subsequently support AIS and pre-filled income tax return data.
What Mutual Fund Information Will Be Reported?
The SFT framework captures detailed information relating to mutual fund transactions, including:
- PAN and investor details
- Mutual fund/security identification
- Acquisition and redemption transactions
- Number of units
- Transaction dates
- Sale consideration
- Cost of acquisition
- Relevant holding-period information
- Other information required for capital-gain computation
A significant feature is the prescribed FIFO (First-In-First-Out) methodology, which is used to match units acquired with units subsequently redeemed for determining the relevant holding period and transaction details.
SFT Reporting Due Dates
The reporting is structured on a half-yearly basis.
For transactions up to 30 September, the SFT is required to be reported by 31 October.
For transactions up to 31 March, the reporting deadline is 30 April.
The framework also provides mechanisms for correction and deletion of previously reported information, allowing RTAs to rectify errors in submitted SFT data.
What Does This Mean for Mutual Fund Investors?
The new reporting mechanism does not introduce a new tax on mutual fund investments. Instead, it strengthens the flow of financial information to the Income Tax Department.
Investors may increasingly see mutual fund transaction and capital-gain information reflected in AIS and pre-filled tax-return data.
However, taxpayers should not blindly rely on pre-filled figures. Mutual fund investors should reconcile the information appearing in AIS with their broker/RTA statements, transaction history and actual capital-gain computation before filing their income tax return.
This is particularly important where investors have multiple mutual funds, systematic investment plans (SIPs), partial redemptions, switches or transactions spread across different financial years.
FIFO-Based Capital Gain Reporting
The prescribed FIFO approach is particularly relevant for investors who have accumulated units through multiple purchases.
When units are redeemed, the reporting framework identifies the corresponding acquisition transactions to determine the relevant cost and holding period. This can help bring greater consistency to the information reported to the Income Tax Department.
However, the information reported through SFT should still be verified against the taxpayer’s actual records before determining the final taxable capital gain.
Impact on Mutual Fund Investors and AIS
The new SFT reporting framework does not introduce a new tax on mutual fund investments. Instead, it strengthens the reporting and information-sharing mechanism between financial intermediaries and the Income Tax Department.
As transaction-level information becomes available, investors may see more detailed mutual fund information reflected in their AIS or pre-filled income tax return data.
However, taxpayers should not treat AIS information as the final capital-gain computation.
Investors should reconcile the information appearing in AIS with their mutual fund statements, RTA records, transaction history and their own capital-gain computation before filing the income tax return.
This is particularly important where there are SIPs, partial redemptions, switches, multiple mutual funds or transactions carried forward from earlier years.
The new CBDT SFT reporting rules for mutual fund transactions mark another step towards greater transparency and automation in India’s tax information-reporting system. For investors, the key takeaway is to maintain complete mutual fund transaction records and carefully reconcile AIS information before filing the ITR.
This article is for informational purposes only and should not be considered tax, legal or investment advice.
