Chapter XXIII - Miscellaneous
Section 509
Section 509: obligation to furnish information on crypto-asset transactions
Section 509 requires prescribed "reporting entities" dealing in crypto-assets to periodically report transaction information to the income-tax authorities, mirroring the reporting framework used for other specified financial transactions.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Any person, being a reporting entity, as may be prescribed, in respect of a crypto-asset, shall furnish information in respect of a transaction of such crypto-asset in a statement, for such period, within such time, in such form and manner and to such income-tax authority, as may be prescribed.
(2) Where the prescribed income-tax authority considers that the statement furnished under sub-section (1) is defective, he may intimate the defect to the person who has furnished such statement and give him an opportunity of rectifying the defect within thirty days from the date of such intimation or such further period as may be allowed, and if the defect is not rectified within such period, the provisions of this Act shall apply as if such person had furnished inaccurate information in the statement.
(3) Where a person who is required to furnish a statement under sub-section (1) has not furnished the same within the specified time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such statement within a period not exceeding thirty days from the date of service of such notice and he shall furnish the statement within the time specified in the notice.
(4) If any person, having furnished a statement under sub-section (1), or in pursuance of a notice issued under sub-section (3), comes to know or discovers any inaccuracy in the information provided in the statement, he shall within ten days inform the prescribed income-tax authority, the inaccuracy in such statement and furnish the correct information in such manner as may be prescribed.
(5) The Central Government may, by rules prescribe—
(a) the persons referred to in sub-section (1) to be registered with the prescribed income-tax authority;
(b) the nature of information and the manner in which such information shall be maintained by the persons referred to in clause (a); and
(c) the due diligence to be carried out by the persons referred to in sub-section (1) for the purpose of identification of any crypto-asset user or owner.
(6) For the purposes of this section, the expression “crypto-asset” shall have the meaning assigned to it in section 2(111)(d).
Introduction
A prescribed crypto-asset reporting entity must furnish transaction information in a prescribed statement. Section 509 also provides procedures for defects, non-filing and later-discovered inaccuracies.
An inaccuracy discovered after filing must be reported within ten days with corrected information in the prescribed manner. The Central Government may make rules on registration, recordkeeping and due diligence.
Key takeaways
Prescribed reporting entity
The duty applies to persons prescribed as reporting entities in respect of crypto-assets.
Thirty-day defect opportunity
After a defect intimation, the normal correction window is thirty days or a further period allowed.
Non-filing notice
An authority may require a missing statement within a period not exceeding thirty days from service of notice.
Ten-day self-correction
A later-discovered inaccuracy must be reported within ten days, with correct information furnished as prescribed.
Who must report, and what
Any person being a reporting entity, as may be prescribed, in respect of a crypto-asset, must furnish information on a transaction of such crypto-asset in a statement, for such period, within such time, in such form and manner, and to such income-tax authority, as may be prescribed.
Fixing defects in the statement
If the prescribed income-tax authority considers the statement defective, they may intimate the defect and give an opportunity to rectify it within thirty days (or a further allowed period). If not rectified in time, the Act applies as if the person had furnished inaccurate information.
Notice for non-filing, and correcting later-discovered inaccuracies
If the statement is not furnished within the specified time, the prescribed income-tax authority may serve a notice requiring it within a period not exceeding thirty days from service of the notice.
If a person, having furnished a statement, later discovers any inaccuracy, they must inform the prescribed income-tax authority within ten days and furnish correct information as may be prescribed.
Rule-making powers
The Central Government may, by rules, prescribe the persons to be registered with the prescribed income-tax authority, the nature and manner of maintaining the required information, and the due diligence to be carried out for identifying any crypto-asset user or owner.
Meaning of "crypto-asset"
"Crypto-asset" has the meaning assigned to it in section 2(111)(d) of the Act.
Step-by-step flow for applying Section 509
- 1
Is the person a reporting entity for a crypto-asset, as prescribed?
Who is a reporting entity is left to rules. "Crypto-asset" has the meaning in section 2(111)(d) (Section 509(6)).
- No: Section 509 does not require a statement from this person.
- Yes: Go to the next step.
- 2
Has the statement on crypto-asset transactions been furnished as prescribed?
Section 509(1) leaves the period, time, form, manner and authority to rules.
- No: Under Section 509(3), the authority may serve a notice; the statement must be furnished within the time in the notice, which cannot exceed thirty days from service. Then continue with step 3.
- Yes: Go to the next step.
- 3
Has the authority intimated a defect?
Under Section 509(2), the person gets thirty days from the intimation, or any further period allowed, to rectify it.
- Not rectified in time: The Act applies as if the person had furnished inaccurate information in the statement.
- Rectified, or no defect: Go to the next step.
- 4
Has the person later found an inaccuracy?
Under Section 509(4), the person must inform the authority within ten days and furnish the correct information in the prescribed manner.
- 5
Follow the rules on registration and due diligence
Under Section 509(5), the Central Government may prescribe which persons must register, what information they must keep and how, and the due diligence for identifying crypto-asset users or owners.
Practical checklist
Do
- Confirm whether the entity is a prescribed reporting entity and retain transaction records.
- Track every defect notice and the date an inaccuracy is discovered.
Avoid
- Do not assume an uncorrected defective statement is treated as a valid accurate statement.
Illustrative example
Worked example: a crypto exchange that missed the time
Hypothetical facts (illustration only, not a real taxpayer): CoinHub is assumed to be a prescribed reporting entity. It does not furnish its statement within the prescribed time. On 2 August 2027 it is served a notice giving it 25 days. It files on 20 August 2027. On 1 October 2027 it finds that some transactions were left out. All dates are assumed.
Notice period
Twenty-five days is within the thirty-day ceiling in Section 509(3). Twenty-five days from 2 August 2027 is 27 August 2027.
Filing
CoinHub files on 20 August 2027, within the time in the notice.
Later discovery
Under Section 509(4), CoinHub must inform the authority and furnish the correct information within ten days of 1 October 2027, that is by 11 October 2027.
If a defect is intimated
If the authority finds the statement defective, CoinHub has thirty days from the intimation, or any further period allowed, to fix it; otherwise it is treated as having furnished inaccurate information.
Outcome
- CoinHub has complied with the notice.
- The omitted transactions must be reported by 11 October 2027 in the prescribed manner.
Frequently asked questions
Who is required to report crypto-asset transactions under Section 509?
A person who is a prescribed "reporting entity" in respect of a crypto-asset.
What happens if a crypto-asset reporting statement is inaccurate and not corrected in time?
If a defect is intimated and not rectified within thirty days (or the further allowed period), the Act treats the person as having furnished inaccurate information in the statement.
Where is "crypto-asset" defined for this section?
Section 509(6) points to the definition in section 2(111)(d) of the Act.
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Talk to our tax team about this sectionLast updated 9 October 2026