What Has Changed: Forms & Rules Updates
- The Income-tax (Third Amendment) Rules, 2026 introduced Form ITR-BN, and amended Rule 332 by inserting Appendix IV concerning returns related to search and requisition cases. These changes are effective from 1 April 2026 for Assessment Year (AY) 2026-27. (incometax.gov.in)
- Also, an official notification (No. 80/2026) exempts several categories of payments made to IFSC (International Financial Services Centres) units from TDS under the new Income-tax Act, 2025—covering interest, dividends, commissions etc. (incometax.gov.in)
Who Must Use Form ITR-BN and When
- Any person—or entity—subjected to a search under Section 132, or a books of accounts requisition under Section 132A on or after 1 September 2024, and issued a notice under Section 158BC (or read with 158BD), must file ITR-BN. (incometax.gov.in)
- The return covers a block period that spans multiple previous years and may include years where no return was filed, assets were undisclosed, etc. The due-date will be as specified in the notice. (incometax.gov.in)
Non-Deduction of TDS for IFSC Units: What it Means
- IFSC units that qualify under the law are now exempt from TDS on interest, dividends, commissions, brokerage, and similar incomes. (incometax.gov.in)
- Also, aircraft lease rent and ship lease rent paid to IFSC units have non-deduction notifications under Section 147 of the Act. (incometax.gov.in)
Steps to Stay Compliant with the New Rules
- Assess whether you’re covered under search/requisition cases—if you’ve received notice under Section 158BC/BD. If yes, start preparing for ITR-BN.
- Collect full documentation for block period: income sources, assets (especially foreign or digital), TDS/TCS certificates, bank statements.
- Check your IFSC unit status: if paid incomes of types exempted, ensure payer is applying the non-deduction correctly.
- Use correct TDS/TCS withholding if not exempt and verify TDS certificates you receive.
Illustrative Examples
- A company in Gandhinagar running IFSC-based services earns brokerage in AY 2026-27: under notification, brokerage paid to it should be without TDS if conditions met.
- An individual whose house property sale led to undocumented income seized under search: requiring filing ITR-BN even for lost past returns.
Penalties & Consequences of Non-Compliance
- Missing filing of ITR-BN when required results in substantive penalties under search & block assessment provisions.
- Incorrectly deducting TDS when exemption applies (or vice versa) may lead to needless tax credits or liabilities, triggering refunds delays or assessments.
Key Takeaways
- Be aware whether new rules apply to you—search/requisition, IFSC incomes etc.
- File correct forms (ITR-BN, etc.), maintain documentation.
- Stay current on notifications from CBDT, especially if your nature of income or organisation type falls under recent exemptions.
- When in doubt, consult a tax professional or official publications (e.g. incometax.gov.in) for the exact wording of notifications.