Obligation to furnish statement of financial transaction or reportable account
[Section-508 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 508(1) of Income Tax Act 2025
508(1) Any person, being—
- 508(1)(a) an assessee; or
- 508(1)(b) the prescribed person, in the case of an office of Government; or
- 508(1)(c) a local authority or other public body or association; or
- 508(1)(d) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908; or
- 508(1)(e) the registering authority empowered to register motor vehicles under Chapter IV of the Motor Vehicles Act, 1988; or
- 508(1)(f) the Director General as referred to in section 2(a) of the Post Office Act, 2023; or
- 508(1)(g) the Collector referred to in section 3(g) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; or
- 508(1)(h) the recognised stock exchange referred to in section 2(f) of the Securities Contracts (Regulation) Act, 1956; or
- 508(1)(i) an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934; or
- 508(1)(j) a depository referred to in section 2(1)(e) of the Depositories Act, 1996; or
- 508(1)(k) a prescribed reporting financial institution; or
- 508(1)(l) any other person, as prescribed,
who is responsible for registering, or, maintaining books of account or other document containing a record of any specified financial transaction or any reportable account, as prescribed, under any law in force, shall furnish a statement regarding such specified financial transaction or such reportable account, which is registered or recorded or maintained by him and information relating to which is relevant and required for this Act, to the income-tax authority or such other authority or agency, as prescribed.
Section 508(2) of Income Tax Act 2025
508(2) The statement referred to in sub-section (1) shall be furnished for such period, within such time and in the form and manner, as prescribed.
Section 508(3) of Income Tax Act 2025
508(3) In sub-section (1), “specified financial transaction” means any transaction—
- 508(3)(a) of purchase, sale or exchange of goods or property or right or interest in a property; or
- 508(3)(b) for rendering any service; or
- 508(3)(c) under a works contract; or
- 508(3)(d) by way of an investment made or an expenditure incurred; or
- 508(3)(e) for taking or accepting any loan or deposit,
as prescribed.
Section 508(4) of Income Tax Act 2025
508(4) The Board may prescribe different values for different transactions specified in sub-section (3) for different persons having regard to the nature of such transaction.
Section 508(5) of Income Tax Act 2025
508(5) If the prescribed income-tax authority finds a defect in the statement furnished under sub-section (1), he may intimate the defect to the person furnishing such statement, to rectify the defect within thirty days from the date of such intimation, and at his discretion, extend the said period upon an application made for this purpose.
Section 508(6) of Income Tax Act 2025
508(6) If the defect mentioned in sub-section (5) remains unrectified within the initial period of thirty days or extended period as applicable, then, the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement, irrespective of anything contained in any other provision of this Act.
Section 508(7) of Income Tax Act 2025
508(7) If a person required to furnish a statement under sub-section (1) fails to do so within the specified time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such statement, within a period not exceeding thirty days from the date of service of notice, and he shall furnish the statement within the time specified therein.
Section 508(8) of Income Tax Act 2025
508(8) If a person, having furnished a statement under sub-section (1), or in pursuance of a notice issued under sub-section (7), becomes aware of any inaccuracy in the information provided, he shall within ten days, inform the prescribed income-tax authority or other authority or agency referred to in sub-section (1), of the inaccuracy and furnish the correct information in such manner, as prescribed.
Section 508(9) of Income Tax Act 2025
508(9) The Central Government may, specify by rules,—
- 508(9)(a) the persons referred to in sub-section (1) to be registered with the prescribed income-tax authority;
- 508(9)(b) the nature of information and the manner in which such information shall be maintained by the persons referred to in clause (a); and
- 508(9)(c) the due diligence to be carried out by the persons for the identification of any reportable account referred to in sub-section (1).
FAQs on Section 508 of Income Tax Act 2025
Who is required to furnish a statement of financial transaction or reportable account under Section 508(1)?
Persons such as assessees, government offices, local authorities, Registrars, vehicle registration authorities, postal authorities, land acquisition Collectors, stock exchanges, RBI officers, depositories, reporting financial institutions, and other prescribed persons are obligated to furnish such statements if they register, record, or maintain specified financial transactions or reportable accounts.
What constitutes a “specified financial transaction” under Section 508(3)?
It includes transactions of purchase, sale or exchange of goods or property, services rendered, works contracts, investments made or expenditures incurred, and loans or deposits accepted or taken, as prescribed.
In what form and manner should the statement be furnished under Section 508(2)?
The statement must be furnished in the form, manner, and for the period prescribed by rules under the Act.
Can different thresholds be prescribed for different transactions or persons?
Yes, as per Section 508(4), the Board may prescribe different values for different specified financial transactions for different persons based on the nature of the transaction.
What happens if there is a defect in the statement furnished?
Under Section 508(5), the income-tax authority may intimate the defect, and the person must rectify it within 30 days or within an extended period if requested and allowed.
What are the consequences of not rectifying a defect within the prescribed time?
As per Section 508(6), failure to rectify the defect within the prescribed or extended time will be treated as furnishing inaccurate information, triggering the applicable provisions of the Act.
What if a person fails to furnish the required statement within the specified time?
Section 508(7) empowers the income-tax authority to issue a notice requiring the person to furnish the statement within 30 days from the date of notice.
What should be done if the person becomes aware of an inaccuracy in the furnished statement?
Under Section 508(8), the person must inform the prescribed authority within ten days and furnish the correct information in the prescribed manner.
Can the Central Government make rules regarding compliance under Section 508?
Yes, Section 508(9) empowers the Central Government to prescribe rules regarding registration, maintenance of information, and due diligence for identifying reportable accounts.
What is a “reportable account” under this section?
A reportable account refers to accounts as prescribed that require disclosure under the Act for tax administration purposes.
Are there any obligations on financial institutions specifically?
Yes, prescribed reporting financial institutions are among those obligated to furnish the statement if they maintain or register reportable accounts or specified transactions.
Who prescribes the format and content of the statement to be furnished?
The Board prescribes the form, manner, content, and threshold values through rules issued under the Income Tax Act, 2025.
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