Section 508 — Obligation to furnish statement of financial transaction or reportable account. Successor to s.285BA of the 1961 Act.
Section 508 is in Chapter XXIII — Miscellaneous, which runs from section 499 to section 536.
Sub-section (1) imposes the reporting obligation on twelve classes of person — an assessee; the prescribed person in the case of a Government office; a local authority or other public body or association; a Registrar or Sub-Registrar under the Registration Act, 1908; a motor vehicle registering authority under the Motor Vehicles Act, 1988; the Director General under the Post Office Act, 2023; the Collector under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; a recognised stock exchange; an officer of the Reserve Bank of India; a depository under the Depositories Act, 1996; a prescribed reporting financial institution; and any other prescribed person. Any of them who is responsible for registering, or maintaining books of account or other document containing a record of, any prescribed specified financial transaction or reportable account under any law in force must furnish a statement regarding it, with the information relevant and required for this Act, to the income-tax authority or such other authority or agency as may be prescribed.
Sub-section (2) leaves the period, time, form and manner of the statement to be prescribed. Sub-section (3) defines "specified financial transaction" as a transaction, as may be prescribed, of purchase, sale or exchange of goods, property or a right or interest in property; for rendering any service; under a works contract; by way of an investment made or expenditure incurred; or for taking or accepting a loan or deposit. Sub-section (4) lets the Board prescribe different values for different transactions for different persons, having regard to the nature of the transaction.
Sub-sections (5) and (6) deal with defects: the prescribed income-tax authority may intimate a defect and require rectification within thirty days, extendable at his discretion on an application, and if it remains unrectified within that or the extended period, the Act applies as if the person had furnished inaccurate information in the statement, overriding any other provision.
Sub-section (7) allows that authority, where a person fails to furnish the statement in time, to serve a notice requiring it within a period not exceeding thirty days from service, and he must furnish it within the time specified in the notice. Sub-section (8) requires a person who becomes aware of an inaccuracy in a statement furnished under sub-section (1) or pursuant to such a notice to inform the authority within ten days and furnish the correct information in the prescribed manner. Sub-section (9) lets the Central Government specify by rules the persons to be registered with the prescribed income-tax authority, the nature and manner of maintaining information, and the due diligence for identifying a reportable account.
The Department cannot see most transactions unless someone who records them in the ordinary course reports them, so the section converts registrars, banks, depositories, exchanges and other record keepers into a reporting network. Everything quantitative is left to the rules, which allows the reporting values to be set transaction by transaction and person by person without amending the Act. The defect machinery exists because a statement that is filed but wrong is of no use.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to rectify a defect in the statement | Thirty days from the date of the intimation | On intimation of the defect by the prescribed income-tax authority; extendable at his discretion on an application made for the purpose | Sub-section (5) |
| Time that may be allowed by a notice for a statement not furnished | A period not exceeding thirty days from the date of service of the notice | A ceiling on the period the prescribed income-tax authority may allow, not a fixed period; the person must furnish within the time specified in the notice | Sub-section (7) |
| Time to report an inaccuracy discovered after filing | Within ten days | Where the person, having furnished the statement under sub-section (1) or pursuant to a notice under sub-section (7), becomes aware of any inaccuracy in the information provided | Sub-section (8) |
| Transaction values that trigger reporting | As may be prescribed | Sub-section (4) lets the Board prescribe different values for different transactions for different persons, having regard to the nature of the transaction; the section itself states no monetary threshold | Sub-sections (3) and (4) |
The section states no monetary threshold at all. Which transactions must be reported, and above what value, is left to the rules under sub-sections (3) and (4), and the Board may set different values for different transactions and different persons, so the obligation cannot be worked out from the section alone. The consequence of a defect is disproportionate to its appearance: under sub-section (6), a defect left unrectified beyond thirty days, or beyond any extension granted, makes the Act apply as if inaccurate information had been furnished, notwithstanding anything else. The thirty days in sub-section (7) is a ceiling on what the authority may allow, not an entitlement, and the duty is to furnish within the time actually specified. Sub-section (8) creates a continuing obligation with a much shorter clock — ten days from becoming aware of an inaccuracy — that runs after filing and is not triggered by any notice.
A depository furnishes its statement for the period and is later told by the prescribed income-tax authority that the statement is defective. It has thirty days from that intimation to rectify, and may apply for an extension, which the authority may grant at his discretion. If it does nothing and the thirty days pass, sub-section (6) makes the Act apply as if it had furnished inaccurate information in the statement. Separately, if three months after filing it discovers on its own that an account was wrongly reported, sub-section (8) requires it to inform the authority within ten days and furnish the correct information in the prescribed manner.
As the statement itself, furnished to the prescribed income-tax authority or other prescribed authority or agency; as a defect intimation under sub-section (5); and as a notice under sub-section (7) requiring a statement that was not filed on time.
the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement
within a period not exceeding thirty days from the date of service of such notice
he shall within ten days, inform the prescribed income-tax authority ... of the inaccuracy and furnish the correct information
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See every circular and notification on this section, or the circulars index.
See every circular and notification on this section, or the notifications index.