TaxTMI 
TaxTMI 
Evolving Obligations: A Comparative Analysis of Clause 508 of the Income Tax Bill, 2025 and Section 285BA of the Income-tax Act, 1961"
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....nsure compliance, and combat tax evasion by mandating the reporting of specified financial transactions by a wide array of entities. The evolution from Section 285BA to Clause 508 reflects both legislative intent and administrative experience gained over the years. This commentary provides a comprehensive analysis of Clause 508, its objectives, detailed provisions, practical implications, and a comparative evaluation with the existing Section 285BA. Objective and Purpose The primary objective of both Clause 508 and Section 285BA is to create a robust legal framework for the collection of information on significant financial transactions, thereby empowering the income-tax authorities to detect and prevent tax evasion, ensure effective tax ....
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....* Collectors under the Land Acquisition Act * Recognised stock exchanges * Officers of the Reserve Bank of India * Depositories under the Depositories Act, 1996 * Prescribed reporting financial institutions * Any other person as prescribed The provision applies to anyone responsible for registering or maintaining records of specified transactions or reportable accounts under any law in force. The breadth of coverage ensures that most significant financial transactions in the economy are subject to reporting requirements. 2. Nature of Statements and Transactions Covered Clause 508(1) and (3) require reporting of "specified financial transactions" or "reportable accounts." The term "specified financial transaction" is defined in ....
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....ment being treated as containing inaccurate information, triggering the consequences prescribed elsewhere in the Act. This approach balances procedural fairness with strict compliance. 6. Failure to Furnish Statements and Consequential Notice Clause 508(7) provides that if a person fails to furnish the required statement within the specified time, the authority may serve a notice requiring compliance within thirty days. This ensures that non-compliance is formally addressed before penal action is taken. 7. Correction of Inaccuracies Clause 508(8) mandates that if a person, after furnishing a statement, becomes aware of any inaccuracy, they must inform the authority and provide correct information within ten days. This promotes data inte....
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....nology Clause 508 updates references to statutory authorities and laws to reflect recent legislative changes. For example: * The reference to the "Director General as referred to in section 2(a) of the Post Office Act, 2023" replaces the "Post Master General" under the Indian Post Office Act, 1898, in Section 285BA. * Other references are similarly updated to reflect the latest statutes and definitions. This ensures legal accuracy and alignment with the current legal framework. Wording and Drafting Improvements The language in Clause 508 is streamlined and modernized, with improved clarity in the description of obligations and processes. For instance, the phrase "irrespective of anything contained in any other provision of this Act"....
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....e overall policy direction remains unchanged: to ensure comprehensive, timely, and accurate reporting of significant financial transactions. Ambiguities and Potential Issues in Interpretation 1. Scope of "Any Other Person" The inclusion of "any other person, as prescribed" grants wide latitude to the Government to expand the universe of reporting entities. While this provides flexibility, it may also create uncertainty for businesses and individuals as to potential future obligations. 2. Prescriptive vs. Discretionary Rulemaking The heavy reliance on rules for operational details (thresholds, forms, manner, due diligence, etc.) can lead to frequent changes, requiring reporting entities to be vigilant and adaptive. 3. Overlap with Othe....
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....ome. * Income-tax Department: Access to granular, real-time information enhances the department's ability to detect evasion, undertake risk-based assessments, and meet international commitments. 2. Compliance and Procedural Requirements Entities covered must: * Register with the prescribed authority (if required by rules) * Maintain prescribed records and undertake due diligence for account identification * Furnish statements in the prescribed format and within prescribed timelines * Rectify defects and correct inaccuracies promptly Non-compliance may result in the statement being treated as containing inaccurate information, attracting penalties and other consequences under the Act. 3. Enforcement and Penalties While Cla....