Income Tax Act 2025: Section 499 for Tax Year 2026-27

Certain transfers to be void

[Section-499 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

Section 499(1) of Income Tax Act 2025

499(1) Where, during the pendency of any proceeding under this Act or after the completion thereof, but before the service of notice by the Tax Recovery Officer as per the procedure specified under section 413, any assessee creates a charge on, or parts with the possession of, any of his assets in favour of any other person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise.

Section 499(2) of Income Tax Act 2025

499(2) The charge or transfer as referred to in sub-section (1) shall not be void if it is made—

• 499(2)(a) for adequate consideration and without notice of the pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee; or
• 499(2)(b) with the previous permission of the Assessing Officer.

Section 499(3) of Income Tax Act 2025

499(3) This section applies to cases where the amount of tax or other sum payable or likely to be payable exceeds five thousand rupees and the assets charged or transferred exceed ten thousand rupees in value.

Section 499(4) of Income Tax Act 2025

499(4) In this section,––

• 499(4)(a) “assets” means land, building, machinery, plant, shares, securities and fixed deposits in banks, virtual digital asset, to the extent to which any of the said assets does not form part of the stock-in-trade of the business of the assessee; and
• 499(4)(b) the modes of creating a charge on or parting with the possession of such assets shall include sale, mortgage, gift, exchange or any other mode of transfer.

FAQs on Section 499 of Income Tax Act 2025

What does Section 499(1) of the Income Tax Act, 2025 state about asset transfers?
If an assessee creates a charge on, or parts with possession of, any asset during or after a tax proceeding (but before the Tax Recovery Officer issues notice under Section 413), such transfer is void against any tax claim resulting from the proceeding or otherwise.

Are all asset transfers by an assessee during tax proceedings considered void?
No, not all. Transfers can be valid under specific conditions provided in Section 499(2).

What are the exceptions under which a transfer is not considered void as per Section 499(2)?
A transfer is not void if it is made (a) for adequate consideration and without notice of pending tax proceedings or dues, or (b) with prior permission of the Assessing Officer.

Does Section 499 apply to all transfers regardless of amount or asset value?
No, Section 499(3) limits applicability to cases where the tax payable or likely to be payable exceeds ₹5,000 and the asset value transferred or charged exceeds ₹10,000.

What kinds of assets are covered under Section 499?
As per Section 499(4)(a), it includes land, building, machinery, plant, shares, securities, bank fixed deposits, and virtual digital assets, provided they are not part of the assessee’s business stock-in-trade.

Which modes of transfer are recognized under Section 499(4)(b)?
Recognized modes include sale, mortgage, gift, exchange, or any other type of transfer or parting with possession.

Does this provision apply even after a proceeding is completed?
Yes, Section 499(1) applies both during the pendency of a proceeding and after its completion, until the Tax Recovery Officer issues notice under Section 413.

Is permission from the Assessing Officer mandatory in all valid transfers?
No, it is only required when the transfer doesn’t meet the criteria of adequate consideration and lack of notice of tax proceedings or dues.

Are virtual digital assets also included in the definition of assets for this section?
Yes, virtual digital assets are explicitly included in the definition under Section 499(4)(a).

If the transferred asset is part of stock-in-trade, does Section 499 apply?
No, assets that are part of the assessee’s stock-in-trade are excluded from the scope of Section 499.