The Income-tax (Third Amendment) Rules, 2026

Central Board of Direct Taxes (CBDT), vide Notification No. G.S.R. 656(E) dated 24 July 2026, has announced an important update regarding the Income-tax (Third Amendment) Rules, 2026 introducing Appendix IV (Form ITR-BN) for Income Tax Return for Block Assessment under the Income-tax Act, 2025.

Key Details of the Update –

• CBDT has notified the Income-tax (Third Amendment) Rules, 2026 by exercising powers under section 294 read with section 533 of the Income-tax Act, 2025.

• The amendment modifies rule 332(1) of the Income-tax Rules, 2026 by substituting the reference to "Appendix III" with "Appendix III and Appendix IV".

• A new Appendix IV has been inserted containing Form ITR-BN – Income Tax Return for Block Assessment for search and seizure cases (Chapter XVI-B).

• Applicability: The Rules apply to any search initiated under section 247 or requisition made under section 248 of the Income-tax Act, 2025 on or after 1 April 2026.

• Effective Date: The Rules are deemed to have come into force on 1 April 2026.

• Key Changes: The newly prescribed Form ITR-BN requires comprehensive reporting including:
• General taxpayer information and block period details.
• Details of search/requisition, notice under section 294, and due date for filing.
• Return filing history and assessment status for tax years falling within the block period.
• Income details for part-year and complete-year tax periods, wherever applicable.
• Computation of undisclosed income for the block period based on the provisions of the Income-tax Act, 2025.
• Head-wise and item-wise break-up of undisclosed income, including money, bullion, jewellery, virtual digital assets, expenditure, incorrect claims, international transactions, specified domestic transactions and other prescribed particulars.

• Penalty/Consequence: No specific penalty or consequence is prescribed in this notification.

Actions if Any –

• Eligible persons covered by block assessment proceedings pursuant to a search or requisition are required to furnish the newly prescribed Form ITR-BN in response to notice issued under section 294 of the Income-tax Act, 2025, as applicable.

Compliance Deadline –

• Effective from 1 April 2026 and applicable to searches initiated or requisitions made on or after 1 April 2026. No separate filing deadline is prescribed in the notification; filing is to be made in accordance with the due date specified in the notice under section 294 of the Income-tax Act, 2025.