Comparison of section 455 "Penalty for furnishing inaccurate statement of financial transaction or reportable account." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....additional per-account penalties on reporting financial institutions where inaccuracies arise. It affects taxpayers, reporting financial institutions, and the tax department. Effective date or decision date: Not stated in the document. Background & Scope Statutory hooks: Clause 455 is linked to section 508 of the same Bill (referenced repeatedly). The clause is placed under the PENALTIES chapter and is titled "Penalty for furnishing inaccurate statement of financial transaction or reportable account." The provision targets persons required to furnish statements u/s 508(1) and reporting financial institutions referred to in section 508(1)(k). The clause provides monetary penalties and post-payment recovery rights for reporting financial in....

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....paid out of any moneys in its possession or which may come to it from the relevant account holder(s). Interpretation Legislative intent and interpretive principles indicated by the text: The clause seeks to penalise both the reporting obligation and failures of due diligence, while also recognising a secondary liability for the reporting financial institution when inaccuracies arise due to account-holders' false information. The separate per-account monetary penalty under sub-section (2) indicates a legislative aim to calibrate penalties to the quantum of inaccurate accounts, creating a specific deterrent for systemic or repeated inaccuracies. The provision of recovery/retention rights under sub-section (3) demonstrates an intent to a....

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....0,000 penalty under clause 455(1)(b). Further clarifying facts (e.g., scale of failure) are Not stated in the document. Interplay The clause explicitly cross-references section 508(1), section 508(1)(k), section 508(8) and section 508(9). The substantive application therefore depends on definitions, thresholds, due-diligence standards, timelines and the identity of "prescribed income-tax authority" as set out in section 508. Any rules, notifications or circulars that operationalise section 508 are not cited in this clause and are Not stated in the document. The clause does not specify procedures for adjudication, appeal, mitigation, or compounding of the penalty; such mechanisms are Not stated in the document. Differences Between the Two....

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....thority in respect of the additional per-account penalty. It may lead to more predictable enforcement outcomes, higher aggregate penalties collected, and a stronger compliance incentive for financial institutions to verify account-holder information or seek recovery from account-holders promptly. * Other practical consequences (e.g., recovery and retention rights in sub-section (3), and primary penalty under sub-section (1)) remain the same in text and effect between the two versions. Practical Implications * Compliance and risk areas: Persons required to furnish statements u/s 508(1) face a significant fixed penalty (Rs.50,000) for inaccuracies or failures to correct within the specified period, and for non-compliance with due dilig....