Obligation to furnish information on transaction of crypto-asset
[Section-509 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 509(1) of Income Tax Act 2025
509(1) Any person, being a reporting entity, as prescribed, in respect of a crypto-asset, shall furnish information in respect of a transaction of such crypto-asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority, as prescribed.
Section 509(2) of Income Tax Act 2025
509(2) Where the prescribed income-tax authority considers that the statement furnished under sub-section (1) is defective, he may intimate the defect to the person who has furnished such statement and give him an opportunity of rectifying the defect within thirty days from the date of such intimation or such further period as may be allowed, and if the defect is not rectified within such period, the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement.
Section 509(3) of Income Tax Act 2025
509(3) Where a person who is required to furnish a statement under sub-section (1) has not furnished the same 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 such notice and he shall furnish the statement within the time specified in the notice.
Section 509(4) of Income Tax Act 2025
509(4) If any person, having furnished a statement under sub-section (1), or in pursuance of a notice issued under sub-section (3), comes to know or discovers any inaccuracy in the information provided in the statement, he shall within ten days inform the prescribed income-tax authority, the inaccuracy in such statement and furnish the correct information in such manner as prescribed.
Section 509(5) of Income Tax Act 2025
509(5) The Central Government may, by rules prescribe—
- 509(5)(a) the persons referred to in sub-section (1) to be registered with the prescribed income-tax authority;
- 509(5)(b) the nature of information and the manner in which such information shall be maintained by the persons referred to in clause (a); and
- 509(5)(c) the due diligence to be carried out by the persons referred to in sub-section (1) for the purpose of identification of any crypto-asset user or owner.
Section 509(6) of Income Tax Act 2025
509(6) In this section, “crypto-asset” shall have the meaning assigned to it in section 2(111)(d).
FAQs on Section 509 of Income Tax Act 2025
Who is required to furnish information under Section 509(1)?
Any person classified as a prescribed reporting entity in respect of a crypto-asset is required to furnish information about crypto-asset transactions.
What kind of information must be furnished under Section 509(1)?
The reporting entity must furnish a statement containing information about crypto-asset transactions, for the specified period, within the prescribed time, in the prescribed form and manner, to the designated income-tax authority.
What happens if the statement furnished is found defective?
If the income-tax authority considers the statement defective, they will notify the reporting entity and allow them 30 days (or further period if allowed) to rectify it. Failure to correct it will be treated as if inaccurate information was furnished.
What if the reporting entity does not file the statement within the prescribed time?
The income-tax authority may issue a notice requiring the entity to file the statement within 30 days from the date of service of the notice.
What is the reporting entity’s obligation upon discovering an inaccuracy in the submitted statement?
If any inaccuracy is discovered in a submitted statement, the entity must inform the prescribed authority and furnish correct information within 10 days in the manner prescribed.
What powers does the Central Government have under Section 509(5)?
The Central Government may make rules regarding registration of reporting entities, maintenance and nature of information to be furnished, and due diligence procedures for identifying crypto-asset users or owners.
What is the meaning of ‘crypto-asset’ in this section?
The term “crypto-asset” carries the meaning assigned to it in Section 2(111)(d) of the Income Tax Act, 2025.
Are there any prescribed rules for the format or manner of furnishing the information?
Yes, the format, manner, period, and specific authority for filing the information will be as prescribed by the Central Government through rules.
Can the income-tax authority allow more than 30 days to rectify a defective statement?
Yes, the income-tax authority has the discretion to allow an extended period beyond 30 days for rectification of defects.
Is there any obligation to correct even voluntarily discovered errors in filed statements?
Yes, the person who discovers an inaccuracy in the filed statement must report it and furnish correct details within 10 days.
Is registration with the income-tax authority mandatory for reporting entities?
Yes, as per Section 509(5)(a), the Central Government may prescribe that such reporting entities be registered with the prescribed income-tax authority.
What due diligence is expected from reporting entities?
Reporting entities must follow prescribed due diligence procedures to identify users or owners of crypto-assets as laid out by the Central Government.
What is the consequence of not responding to a notice under Section 509(3)?
Non-compliance may lead to further proceedings under the Act, including possible penalties for failure to furnish required information.
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