Section 454 — Penalty for failure to furnish statement of financial transaction or reportable account. Successor to s.271FA of the 1961 Act.
Section 454 is in Chapter XXI — Penalties, which runs from section 439 to section 472.
The section, as substituted by Act No. 4 of 2026 with effect from 1 April 2026, provides for a single penalty. Where a person required to furnish a statement of financial transaction or reportable account under section 508(1) fails to furnish it within the period specified in the notice issued under section 508(7), the income-tax authority prescribed under section 508(1) may impose a penalty of Rs. 1000 for every day for which the failure continues, beginning from the day immediately after the period specified in that notice expires, and the penalty shall not exceed Rs. 100000.
Before the substitution the section had two sub-sections: a penalty of Rs. 500 for every day of failure to furnish the statement within the time prescribed under section 508(2), and a further penalty of Rs. 1000 for every day of failure after the period specified in a notice under section 508(7). Neither carried a monetary ceiling. As the section now stands, the Rs. 500 a day limb keyed to the ordinary filing time is gone, the penalty attaches only to a failure after a notice under section 508(7), and it is capped at Rs. 100000.
The information in a statement of financial transaction or a reportable account is useful only if it arrives, and a daily penalty is the pressure that makes filing cheaper than delay. The 2026 substitution rebalances that pressure: the trigger is narrowed to disobedience of a notice rather than mere lateness, and the exposure is bounded so that an extended default cannot produce an unlimited penalty.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Rate of penalty | Rs. 1000 for every day for which the failure continues | Beginning from the day immediately after the period specified in the notice under section 508(7) for furnishing the statement or reportable account expires | Section 454, as substituted by Act No. 4 of 2026 w.e.f. 1-4-2026 |
| Maximum penalty | Not exceeding Rs. 100000 | A ceiling on the aggregate daily penalty; the pre-substitution section carried no such cap | Section 454, as substituted by Act No. 4 of 2026 w.e.f. 1-4-2026 |
Two changes made by the substitution decide most cases. First, the penalty now runs only from the day after the period in the section 508(7) notice expires — the separate Rs. 500 a day penalty for missing the ordinary time under section 508(2) is no longer in the section, so lateness alone, before any notice, does not attract this penalty. Second, the exposure stops at Rs. 100000, which is reached after one hundred days; further delay adds nothing under this section. The power is discretionary — the authority "may impose" — and it rests with the income-tax authority prescribed under section 508(1), not with the Assessing Officer as such.
A reporting entity is served with a notice under section 508(7) whose period expires on 30 June and furnishes the statement on 15 August. The failure continues for 46 days from 1 July, so the penalty is Rs. 46000. Had it filed only in December, the penalty would have stopped at Rs. 100000 — the cap the section now carries and the pre-2026 text did not.
You meet this as a penalty order from the income-tax authority prescribed under section 508(1), and it follows a notice under section 508(7) requiring the statement or reportable account — not the ordinary filing date on its own.
a penalty of Rs. 1000 for every day for which such failure continues, beginning from the day immediately after the period specified in such notice for furnishing such statement or reportable account expires and such penalty shall not exceed Rs. 100000.
See the full 1961 to 2025 concordance.