Rule 237 of the Income-tax Rules, 2026

Where this rule sits

Rule 237 gives effect to Section 508 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.

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What this rule does

Sub-rule (1) requires the statement of financial transaction under section 508(1) to be furnished in Form No. 165, verified in the manner indicated in it, in respect of all the transactions specified in sub-rule (2) in a financial year.

Sub-rule (2) carries the main Table: the person in column 4 reports the transactions of the nature in column 2 at or above the value in column 3, which are registered or recorded by him. Entry 1 covers a banking company or co-operative bank to which the Banking Regulation Act, 1949 applies, and has three limbs — cash payment for purchase of bank drafts, pay orders or banker's cheques, reportable at ten lakh rupees or more in a financial year for a person having a Permanent Account Number and Rs. 5,00,000 or more for a person not having one; payments in cash or otherwise for purchase of pre-paid instruments issued by the Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007, at ten lakh rupees or more; and cash deposits or withdrawals, including through bearer's cheque, in or from one or more current accounts, at fifty lakh rupees or more.

Entry 2 covers cash deposits in accounts other than a current account and a time deposit, at ten lakh rupees or more for a person having a Permanent Account Number and Rs. 5,00,000 or more for a person not having one, reported by a banking company or co-operative bank or by the Post Master General or the Regional Head under the Post Office Rules, 2024. Entry 3 covers time deposits, other than one made through renewal of another time deposit, at ten lakh rupees or more, reported by a banking company or co-operative bank, the Post Master General or Regional Head, a Nidhi under section 406 of the Companies Act, 2013, or a non-banking financial company registered under section 45-ia of the Reserve Bank of India Act, 1934 to hold or accept deposits from the public.

Entry 4 covers payments against credit card bills — Rs. 1,00,000 or more in cash, or ten lakh rupees or more by any other mode — reported by a banking company or co-operative bank or any other company or institution issuing credit cards. Entry 5 covers receipts for acquiring bonds or debentures, other than on renewal, at ten lakh rupees or more, reported by the issuing company or institution. Entry 6 covers receipts for acquiring shares, including share application money, at ten lakh rupees or more, reported by the company issuing the shares. Entry 7 covers buy back of shares other than shares bought in the open market, at ten lakh rupees or more, reported by a listed company purchasing its own securities under section 68 of the Companies Act, 2013.

Entry 8 covers receipts for sale of foreign currency, including credit to a foreign exchange card, expense in such currency through a debit or credit card, or issue of a traveller's cheque, draft or other instrument, at ten lakh rupees or more for a person having a Permanent Account Number and Rs. 5,00,000 or more for a person not having one, reported by an authorised person under section 2(c) of the Foreign Exchange Management Act, 1999. Entry 9 covers purchase, sale, gift or joint development agreement of immovable property at an amount of forty-five lakh rupees or more, or a stamp duty value under section 2(105) of the Act of forty-five lakh rupees or more, reported by the Inspector-General under section 3 of the Registration Act, 1908 or the Registrar or Sub-Registrar under section 6 of that Act. Entry 10 covers purchase of stamp paper at Rs. 2,00,000 or more in one transaction for a person having a Permanent Account Number and Rs. 1,00,000 or more for a person not having one, reported by Stock Holding Corporation of India Limited. Entry 11 covers receipts against insurance premium at Rs. 5,00,000 or more for a person having a Permanent Account Number and Rs. 2,50,000 or more for a person not having one, reported by an insurer as defined in section 2(9) of the Insurance Act, 1938. Entry 12 covers receipt of cash payment for sale of goods or services of any nature other than those at Sl. Nos. 1 to 11, exceeding Rs. 2,00,000, reported by any person liable for audit under section 63.

Sub-rule (3) tells the reporting person, other than those at Sl. Nos. 9, 10 and 12, how to aggregate for the threshold: take into account all accounts of the same nature maintained for that person during the financial year; aggregate all transactions of the same nature recorded or maintained for that person during the year; attribute the entire value or aggregated value to all the persons where the account or transaction is in more than one name; and apply the threshold limit separately to deposits and withdrawals for the current account transactions at Sl. No. 1(c).

Sub-rule (4)(a) requires Form No. 165 to be furnished to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation), through online transmission of electronic data to a designated server under the digital signature of the person specified in sub-rule (8), in the data structure specified by the Principal Director General of Income-tax (Systems); a Post Master General, Registrar or Inspector General may instead furnish it in computer readable media including a Compact Disc or Digital Video Disc, with the verification in Form-V on paper. Sub-rule (4)(b) allows the Board to designate an officer not below the rank of Joint Director of Income-tax as Information Statement Administrator for day to day administration.

Sub-rule (5) fixes the due date: on or before the 31st May immediately following the financial year in which the transaction is registered or recorded.

Sub-rule (6) carries a second Table, for pre-filing the return of income. Statements of capital gains on transfer of listed securities or units of Mutual Funds, dividend distributed, and interest paid or credited are to be furnished for all transactions — by a recognised stock exchange, a depository under section 2(1)(e) of the Depositories Act, 1996, a recognised Clearing Corporation or a Registrar to an issue and share transfer agent registered under section 12(1) of the Securities and Exchange Board of India Act, 1992 for capital gains; by a company for dividend distributed; and by a banking company or co-operative bank, the Post Master General or Regional Head, or a non-banking financial company registered under section 45-ia of the Reserve Bank of India Act, 1934 for interest. The Form, frequency and manner are as may be specified by the Principal Director General of Income Tax (Systems) or the Director General of Income Tax (Systems) with the approval of the Board.

Sub-rule (7) requires every reporting person in either Table to communicate to the Principal Director General of Income-tax (Systems) the name, designation, address and telephone number of the Designated Director and the Principal Officer and to obtain a registration number, and places a duty on the reporting person, its Designated Director, Principal Officer and employees to observe the procedure and manner of maintaining information specified by its regulator and to ensure compliance with section 508 and rules 159, 160 and 161 and this rule. Sub-rule (8) requires the statement to be signed, verified and furnished by a person holding a valid power of attorney from the Designated Director where the reporting person is a non-resident, and by the Designated Director in all other cases. Sub-rule (9) defines Designated Director, digital signature, listed securities, Mutual Fund, Principal Officer, recognised clearing corporation, recognised stock exchange, Regulator and securities.

Why it is there

Section 508(1) requires a statement of financial transaction but leaves the transactions, the values, the reporting persons, the form and the timetable to be prescribed. This rule supplies all of them, and does two distinct jobs in doing so. The first Table is a threshold-based reporting net aimed at high-value transactions, with lower thresholds where the person has no Permanent Account Number. The second Table, added for pre-filing the return of income, is not threshold-based at all — it covers all transactions of three kinds so that capital gains, dividend and interest data can be placed in the return before the taxpayer files it.

Who it applies to

• A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies
• The Post Master General or the Regional Head referred to in the Post Office Rules, 2024
• A Nidhi under section 406 of the Companies Act, 2013, and a non-banking financial company registered under section 45-ia of the Reserve Bank of India Act, 1934
• A company or institution issuing credit cards, bonds or debentures, or shares, and a listed company buying back its own securities
• An authorised person under section 2(c) of the Foreign Exchange Management Act, 1999
• The Inspector-General, Registrar or Sub-Registrar under the Registration Act, 1908
• Stock Holding Corporation of India Limited
• An insurer as defined in section 2(9) of the Insurance Act, 1938
• Any person liable for audit under section 63 receiving cash for sale of goods or services
• A recognised stock exchange, a depository, a recognised Clearing Corporation and a Registrar to an issue and share transfer agent, for the pre-filing Table
• The Designated Director and the Principal Officer of every reporting person

The figures, and what each one turns on

The forms it prescribes

• Form No. 165 — statement of financial transaction furnished under section 508(1)
• Form-V — paper verification accompanying a statement furnished in computer readable media by a Post Master General, Registrar or Inspector General

What this means in practice

The thresholds are not per transaction unless the entry says so. Sub-rule (3) requires the reporting person to look across all accounts of the same nature and all transactions of the same nature for that person in the financial year, and to attribute the entire value to every holder of a joint account, so a joint account crossing the limit is reported against each holder for the full amount. Two carve-outs matter: the aggregation directions do not apply to Sl. Nos. 9, 10 and 12, and stamp paper at Sl. No. 10 is measured in one transaction. For current accounts at Sl. No. 1(c), deposits and withdrawals are tested separately, so an account with forty lakh rupees of each is outside the entry. Several entries carry two thresholds, the lower one applying where the person has no Permanent Account Number, which means the reporting person must know that fact to apply the Table at all. The second Table in sub-rule (6) is different in kind — it has no monetary threshold, covering all transactions of the three kinds, and its Form, frequency and manner are not fixed by the rule but are as may be specified by the Principal Director General or Director General of Income Tax (Systems) with the Board's approval, so no form number can be read out of the rule for it. Finally, the obligation is personal as well as institutional: sub-rules (7) and (8) put the registration, the signature and the compliance duty on the Designated Director and the Principal Officer.

An example

A person deposits Rs. 6 lakh in cash into a savings account and Rs. 5 lakh into another savings account with the same bank in one financial year. Because sub-rule (3)(a) and (b) require all accounts and transactions of the same nature to be aggregated, the bank reports Rs. 11 lakh against Sl. No. 2, even though neither account alone crosses ten lakh rupees. If the same person also has a current account with cash deposits of Rs. 40 lakh and cash withdrawals of Rs. 45 lakh, neither figure reaches fifty lakh rupees, and sub-rule (3)(d) forbids adding them, so nothing is reported under Sl. No. 1(c). The statement for the year goes in Form No. 165 on or before 31st May following.

Where you meet this rule

A taxpayer does not file under this rule; he meets its output in the Annual Information Statement and in the pre-filled figures for capital gains, dividend and interest in his return, and in a notice asking him to explain a reported transaction. Banks, registrars, insurers, companies and persons liable for audit under section 63 meet it directly, in Form No. 165 each May and in the registration of a Designated Director and Principal Officer.

The words themselves

What people get wrong

• Testing each account separately. Sub-rule (3)(a) and (b) require aggregation across all accounts and transactions of the same nature for that person in the financial year.
• Splitting a joint account's value between holders. Sub-rule (3)(c) attributes the entire value to all of them.
• Adding cash deposits and withdrawals in a current account. Sub-rule (3)(d) applies the fifty lakh rupee limit separately to each.
• Using the higher threshold for a person without a Permanent Account Number. Sl. Nos. 1(a), 2, 8, 10 and 11 each carry a lower figure in that case.
• Applying the annual aggregation to stamp paper or immovable property. Sub-rule (3) excludes Sl. Nos. 9, 10 and 12, and Sl. No. 10 is measured in one transaction.
• Having the statement signed by any officer. Sub-rule (8) requires the Designated Director, or a holder of his valid power of attorney where the reporting person is a non-resident.

Read with

• Rule 159
• Rule 160
• Rule 161