Section 508 · Miscellaneous
Section 508 of the Income-tax Act, 2025 — Obligation to Furnish Statement of Financial Transaction or Reportable Account (SFT / FATCA-CRS)
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XXIII
📜 What the law says — Section 508, Income-tax Act 2025
508. (1) Any person, being—
(a) an assessee; or
(b) the prescribed person, in the case of an office of Government; or
(c) a local authority or other public body or association; or
(d) the Registrar or Sub-Registrar appointed under section 6 of the Regis-
tration Act, 1908 (16 of 1908); or
(e) the registering authority empowered to register motor vehicles under
Chapter IV of the Motor Vehicles Act, 1988 (59 of 1988); or
(f) the Director General as referred to in section 2(a) of the Post Office Act,
2023 (43 of 2023); or
(g) the Collector referred to in section 3(g) of the Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and Resettlement
Act, 2013 (30 of 2013); or
(h) the recognised stock exchange referred to in section 2(f) of the Securities
Contracts (Regulation) Act, 1956 (42 of 1956); or
(i) an officer of the Reserve Bank of India, constituted under section 3 of
the Reserve Bank of India Act, 1934 (2 of 1934); or
(j) a depository referred to in section 2(1)(e) of the Depositories Act, 1996
(22 of 1996); or
(k) a prescribed reporting financial institution; or
(l) any other person, as may be prescribed,
who is responsible for registering, or, maintaining books of account or other doc-
ument containing a record of any specified financial transaction or any reportable
account, as may be prescribed, under any law in force, shall furnish a statement
regarding such specified financial transaction or such reportable account, which
is registered or recorded or maintained by him and information relating to which
is relevant and required for this Act, to the income-tax authority or such other au-
thority or agency, as may be prescribed.
(2) The statement referred to in sub-section (1) shall be furnished for such period,
within such time and in the form and manner, as may be prescribed.
(3) In sub-section (1), “specified financial transaction” means any transaction—
(a) of purchase, sale or exchange of goods or property or right or interest in
a property; or
(b) for rendering any service; or
(c) under a works contract; or
(d) by way of an investment made or an expenditure incurred; or
(e) for taking or accepting any loan or deposit,
as may be prescribed.
(4) The Board may prescribe different v
In plain language
What Section 508 actually says
Section 508 of the Income-tax Act, 2025 carries the heading "Obligation to furnish statement of financial transaction or reportable account." It is the direct successor to the well-known Section 285BA of the Income-tax Act, 1961, and it becomes effective from 1 April 2026 (tax year 2026-27). In plain terms, this section does not tax you. Instead, it forces banks, financial institutions, registrars, stock exchanges, depositories and other "reporting persons" to report your big transactions and your financial accounts to the Income-tax Department, so the department can cross-check them against your Income Tax Return (ITR).
The section has two limbs:
- Statement of Financial Transaction (SFT): high-value transactions (big cash deposits, large mutual fund/share purchases, property deals, credit card spends, etc.) are reported in Form 61A.
- Statement of Reportable Account (SRA): this is the FATCA/CRS limb. Indian financial institutions identify accounts held by persons who are tax-resident abroad (or US persons) and report them in Form 61B (a revised format under Draft Form 166 has been proposed) for automatic exchange of information with foreign tax authorities.
Who has to file (and who does NOT)
The obligation is on the reporting entity, not on the ordinary taxpayer. Persons required to furnish statements under Section 508(1) include:
- Banks, NBFCs, post offices, co-operative banks — for cash deposits, fixed deposits and large payments.
- Companies and mutual funds — for share/bond issues and unit purchases.
- Sub-Registrars under the Registration Act, 1908 — for immovable property transactions.
- Recognised stock exchanges, depositories (NSDL/CDSL) and registrars/transfer agents.
- Credit card issuers, authorised foreign-exchange dealers, the RBI, and the Postmaster General.
- Prescribed reporting financial institutions — for the FATCA/CRS reportable-account limb.
As an individual taxpayer you almost never file under Section 508. You only interact with it indirectly — through your Annual Information Statement (AIS) and Form 26AS, which are built from these SFT/SRA filings.
Key timelines and conditions
- Due date: statements are furnished for a financial year, generally by 31 May of the following year (the exact period/time is "as prescribed" by rules).
- Defective statement: if the department intimates a defect, the reporting person must rectify it within 30 days (extendable).
- Non-filers: if a person who should have filed did not, the tax authority can issue a notice, and the statement must then be furnished within 30 days of the notice.
- Inaccuracy: if the reporting person later discovers the information filed was inaccurate, they must inform the department and file correct information within 10 days.
- Due diligence: for FATCA/CRS accounts, reporting financial institutions must maintain and apply prescribed due-diligence and identification procedures to find reportable accounts.
How it interacts with other sections
- Penalty for not filing: handled by Section 454 (successor to Section 271FA of the 1961 Act) — ₹500 per day of default, rising to ₹1,000 per day after a notice.
- Penalty for wrong information / due-diligence failure: a flat penalty (₹50,000, in line with the old Section 271FAA) applies to inaccurate SFT/SRA filing.
- Section 509 is the brand-new sister provision requiring crypto/VDA exchanges to report user transactions from 1 April 2026 — conceptually the same "reporting entity" model.
- The data feeds the AIS/Form 26AS regime, which the department uses to select cases for scrutiny and to nudge non-filers.
Practical implications for a normal taxpayer
Even though you do not file this statement, it directly affects you: the department already knows about your ₹12 lakh FD, your ₹40 lakh flat purchase or your ₹15 lakh mutual-fund investment before you file your ITR. If your return does not match the SFT/AIS data, you may get an e-verification or notice. So the practical rule is simple — reconcile your ITR with your AIS every year and keep proof of the source of high-value transactions.
💡 Example
Worked example 1 — high-value SFT (the individual side). Suppose Mr. Arun deposits ₹6 lakh cash in his savings account in April 2026 and another ₹5 lakh in December 2026 — aggregating ₹11 lakh in the year. Because the SFT threshold for cash deposits in a savings account is ₹10 lakh per year, his bank must report this in Form 61A under Section 508 by 31 May 2027. Arun files nothing himself, but the ₹11 lakh shows up in his AIS. If his ITR shows income of only ₹4 lakh with no explained source, expect a query.
Worked example 2 — penalty on a defaulting bank. A co-operative bank was required to file its SFT by 31 May 2027 but filed only on 20 July 2027 — 50 days late. Under Section 454, the penalty is ₹500 × 50 = ₹25,000. Had the department first issued a notice giving, say, a 30-day window and the bank still delayed 20 days beyond it, the rate jumps to ₹1,000 per day for that later period, i.e., an additional ₹20,000.
Relatable story. Priya, a software engineer in Bengaluru, is also a Green Card holder (a "US person"). Her Indian mutual-fund folio and bank account get flagged by the fund house and bank as a reportable account under the FATCA/CRS limb of Section 508, reported in Form 61B. That information is automatically exchanged with the US IRS. Priya panics — but there is nothing to fear: as long as she has honestly disclosed her Indian income and assets, the reporting is just routine cross-border transparency, not an accusation.
| Transaction / account type | Reporting threshold (per year) | Who reports | Form |
|---|
| Cash deposits in savings account | ₹10 lakh | Banks, post offices | Form 61A |
| Cash deposits/withdrawals in current account | ₹50 lakh | Banks | Form 61A |
| Time deposits (FDs) | ₹10 lakh | Banks, NBFCs, post offices | Form 61A |
| Purchase of mutual fund units | ₹10 lakh | Mutual fund / AMC | Form 61A |
| Purchase of shares / bonds / debentures | ₹10 lakh | Company / stock exchange | Form 61A |
| Credit card payments | ₹1 lakh (cash) / ₹10 lakh (other modes) | Card issuer | Form 61A |
| Purchase/sale of immovable property | ₹30 lakh (stamp-duty value) | Sub-Registrar | Form 61A |
| Foreign currency / remittance (LRS etc.) | ₹10 lakh | Authorised dealer | Form 61A |
| Reportable account (FATCA/CRS) | As per due-diligence rules (foreign tax residents / US persons) | Reporting financial institution | Form 61B |
Related sections
Section 509 — Obligation to furnish information on crypto-asset transactions Section 454 — Penalty for failure to furnish statement of financial transaction/reportable account Section 285BA (1961 Act) — Predecessor obligation to furnish SFT/reportable account Section 512 — Obligation to furnish annual information / Annual Information Statement Rule 114E — Specified financial transactions and SFT thresholds Section 507 — Furnishing of information/returns by prescribed persons
Frequently asked questions
Do I as an individual have to file anything under Section 508?
No. Section 508 places the reporting obligation on banks, financial institutions, registrars and similar entities, not on the ordinary taxpayer. You only see the effect of their reporting in your Annual Information Statement (AIS) and Form 26AS.
What is Section 508 the equivalent of in the old Income-tax Act, 1961?
It replaces Section 285BA of the 1961 Act. The obligation to furnish the Statement of Financial Transaction (SFT) and the Statement of Reportable Account (FATCA/CRS) has been carried over almost unchanged into the 2025 Act.
What is the difference between Form 61A and Form 61B?
Form 61A is the Statement of Financial Transaction (SFT) for high-value domestic transactions. Form 61B is the Statement of Reportable Account under FATCA/CRS, used to report accounts of persons who are tax-resident abroad or US persons for automatic exchange of information.
What happens if my bank reports a transaction I cannot explain?
The transaction appears in your AIS, and if it does not reconcile with the income shown in your ITR, the department may issue an e-verification query or a notice. You should keep documentary proof of the source of any high-value transaction.
What is the penalty if a reporting entity fails to file the statement?
Under Section 508 read with Section 454, the penalty is ₹500 for every day of default, rising to ₹1,000 per day if the entity still fails to file after receiving a notice from the tax authority.
By when must the SFT be filed?
For most categories the Statement of Financial Transaction must be furnished by 31 May following the financial year in which the transactions were recorded. Some categories may be filed half-yearly as prescribed.
What should a reporting entity do if it discovers it filed wrong information?
It must inform the Income-tax Department and furnish the correct information within 10 days of discovering the inaccuracy; otherwise a penalty for inaccurate reporting can apply.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
💬 Discussion & questions
0 comments · Ask anything about this — a Chartered Accountant or the community will reply.
Have a doubt about this (Section 508)? Ask here 👇
Free · takes 20 seconds · our CA answers. No account needed.
No comments yet — be the first to ask. 👆
EaseValue