The Central Board of Direct Taxes (CBDT), through the Directorate of Income Tax (Systems), has issued Notification No. 2 of 2026 dated September 10, 2026, prescribing the format, procedure and guidelines for submission of Statement of Financial Transactions (SFT-2518) for Mutual Fund Transactions under section 508(1) of the Income-tax Act, 2025 read with sub-rule (6) of rule 237 of the Income-tax Rules, 2026, by Registrar and Share Transfer Agents.
The notification has been issued as part of the reporting framework under section 508 of the Income-tax Act, 2025 and rule 237 of the Income-tax Rules, 2026, which require specified reporting persons to furnish Statements of Financial Transactions (SFT). For the purpose of pre-filling income-tax returns, the prescribed statement will contain information relating to capital gains arising from transfer of units of Mutual Funds.
In exercise of the powers conferred under sub-rule (6) of rule 237, the Directorate of Income Tax (Systems) has specified detailed guidelines for the preparation and submission of the SFT. Annexure A contains the guidelines for preparation, Annexure B prescribes the procedure for submission, Annexure C provides the format of the Control Statement to be submitted by the Designated Director, while the prescribed data structure and validation rules have been provided in Annexures D and E respectively.
Under the notification, all Registrar and Share Transfer Agents registered under section 12(1) of the Securities and Exchange Board of India Act, 1992 are required to prepare data files in the prescribed format from their internal systems. The reporting entities are required to submit the prescribed data files through the SFTP Server using login credentials communicated separately. A separate Control Statement is also required to be signed, verified and furnished by the Designated Director.
The Statement of Financial Transactions will be submitted on a half-yearly basis. The SFT relating to the first half of the financial year ending 30 September is required to be furnished on or before 31 October, while the SFT for the remaining half of the financial year ending 31 March is required to be furnished on or before 30 April, respectively.
A key taxpayer-centric feature of the framework is that reporting entities will also be required to provide to the concerned account holder the information relating to Mutual Fund transactions reported to the Income Tax Department. This will enable taxpayers to reconcile such information with the details displayed in their Annual Information Statement (AIS) before filing their income-tax return.
The prescribed guidelines provide that the Mutual Fund Transaction Summary will be used for pre-filling gain, income or loss arising from Mutual Fund transactions. The summary is required to cover user-initiated debit transactions during the reporting period. In the case of debit transactions through transfers, reporting is not required where the transferor and transferee are the same person.
The notification further provides that data relating to Exchange Traded Funds (ETFs) and exchange-based transactions need not be reported under this framework. In the case of minors, details of the legal or natural guardian, including PAN and name, may be provided in accordance with the prescribed data structure.
For determining the estimated sale consideration of a debit transaction, the best possible available price of the asset with the Registrar and Share Transfer Agent is to be taken. Where the sale consideration relating to a sale or transfer is not available, the Redemption Offer Price, i.e. Exit Load-adjusted NAV, on the date of sale or transfer may be adopted. Importantly, taxpayers will be able to modify the sale consideration before filing their return.
The framework also lays down rules for classifying Mutual Fund assets as short-term or long-term capital assets. The period of holding is to be determined based on the difference between the date of sale and date of acquisition, with the First-in-First-out (FIFO) method being used to identify corresponding purchases and compute the period of holding.
Under the prescribed classification, a unit of an Equity Oriented Mutual Fund has a minimum holding period of 12 months for the specified classification. Units of UTI are also subject to the prescribed 12-month criterion where they are not Specified Mutual Funds. For other units, the prescribed holding period is 12 months where listed and 24 months where unlisted, subject to the conditions relating to Specified Mutual Funds under the Income-tax Act, 2025.
For every debit transaction, the corresponding credit is required to be identified using the FIFO method. The estimated cost of acquisition is to be determined using the best possible available price with the RTA. Where the cost of acquisition relating to a credit or transfer is unavailable, the NAV at the end of the day of the credit may be used. The taxpayer will have the facility to modify the cost of acquisition before filing the return.
The notification also provides for determination of the cost of acquisition in respect of certain long-term capital assets acquired before 1 February 2018. In the case of specified units, the framework takes into account the cost of acquisition, fair market value as on 31 January 2018, and the full value of consideration in accordance with the relevant provisions of the Income-tax Act, 2025. The Cost Inflation Index is also to be used for determining the estimated indexed cost of acquisition wherever applicable.
The prescribed reporting framework requires details of clients and summary values for the reporting period to be furnished through the Mutual Fund Account Summary (MF_ACC_SUMM.TXT). Details of transactions effected through transmission, together with off-market transactions recorded in the RTA system, are required to be reported through the Mutual Funds Off-Market Transactions (MF_OFF_TRN.TXT) file.
The Mutual Fund Account Summary will capture a range of transaction-related information, including opening value, purchase value, transaction charges, stamp duty, sale value, Securities Transaction Tax (STT), dividend paid and closing value for the reporting period.
At the transaction level, the reporting structure will capture details including the AMC and client identifiers, PAN, security class and security code, name of the Mutual Fund scheme, debit date and type, asset classification, number of units, estimated unit price, sale consideration and estimated cost of acquisition.
For relevant transactions, the data structure also provides fields for Fair Market Value (FMV) as on 31 January 2018, adjusted FMV, adjusted cost of acquisition, indexed cost of acquisition and STT. These details are intended to support determination and pre-filling of the relevant capital gains information.
The reporting framework also separately covers off-market Mutual Fund transactions. Such reporting includes details of the transferor and transferee, AMC and client identifiers, PAN, security details, quantity transferred, reported consideration, end-of-day unit price and estimated transaction value. The prescribed end-of-day unit price is based on the Redemption Offer Price or Exit Load-adjusted NAV on the date of transfer.
To maintain data accuracy and integrity, any file that does not meet the prescribed validation requirements will be rejected. Where a reporting entity needs to modify previously uploaded data, a Correction Statement is required to be filed containing only those records that require correction. Where uploaded data needs to be deleted, a prescribed Deletion Request is required to be furnished.
The notification also requires reporting persons and entities to implement appropriate information-security, archival and retrieval policies and procedures, with clearly defined roles and responsibilities for securing the information reported and ensuring its timely availability to competent authorities. Any inaccuracy or defect subsequently identified is required to be addressed through a correction or deletion statement, as applicable.
The validation framework categorises issues as Errors, Defects and Exceptions. These include mismatch in Control Statement values, incorrect sequence numbers, non-availability of client data for a reported transaction, blank mandatory fields, invalid PAN, excessive values and mismatches identified after comparison with other submitted data.
The Notification has been issued with the approval of the CBDT and comes into effect from the date of its issue. The new framework is aimed at standardising reporting of Mutual Fund transactions by RTAs and improving the availability of transaction-level information for pre-filling and reconciliation of capital gains and other relevant information in income-tax returns.
The Notification can be accessed at: https://www.incometaxindia.gov.in/documents/d/guest/notification_2_sft-pdf
