Section 455
Section 455: penalty for furnishing inaccurate statement of financial transaction or reportable account
Section 455 deals with statements of financial transaction or reportable accounts under section 508 that are actually filed, but contain inaccurate information or fall short on due diligence - as distinct from section 454, which deals with not filing at all.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
Penalty on the person filing the statement
Sub-section (1): the prescribed income-tax authority under section 508 may direct a person required to furnish a statement under section 508(1) to pay a penalty of ₹50,000, if that person either (a) provides inaccurate information in the statement or fails to furnish correct information within the period specified under section 508(8), or (b) fails to comply with the due diligence requirement under section 508(9).
Additional penalty on a reporting financial institution
Sub-section (2): the prescribed authority may additionally direct a reporting financial institution referred to in section 508(1)(k) to pay ₹5,000 for every inaccurate reportable account, if the institution provides inaccurate information in its statement under section 508(1) and the inaccuracy is due to false or inaccurate information supplied by the holder(s) of that reportable account.
This ₹5,000-per-account penalty is in addition to any penalty the institution may separately owe under sub-section (1).
Recovering the penalty from the account holder
Sub-section (3): where the reporting financial institution pays the sub-section (2) penalty because the account holder supplied false or inaccurate information, the institution is entitled to either recover that amount from the account holder, or retain an equivalent amount out of any money in its possession, or coming to it, from that account holder.
Frequently asked questions
What is the penalty for inaccurate information in a statement of financial transaction?
₹50,000, under section 455(1), where the filer provides inaccurate information, fails to correct it within the period under section 508(8), or fails the due diligence requirement under section 508(9).
Is there a separate penalty specific to financial institutions?
Yes - section 455(2) adds ₹5,000 for every inaccurate reportable account where a reporting financial institution's inaccuracy stems from false information given by the account holder, on top of any penalty under sub-section (1).
Can the financial institution recover this penalty from the account holder?
Yes - section 455(3) lets the institution recover the amount from the account holder, or retain an equivalent sum out of money in its possession or coming to it from that holder.
Related sections
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Get help responding to a financial transaction reporting noticeLast updated 9 September 2026