Compliance
Compliance Tips for Filing in India under the New Income-tax Rules, 2026
India’s Income-tax Rules, 2026 introduce new forms, processing changes for search/requisition cases, and rollback of exempt TDS titles—getting compliant on each front is now more complex.
By NomadicTax Research Team • 5-8 min read • September 5, 2026
## 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](https://www.incometax.gov.in/iec/foportal/latest-news?utm_source=openai))
- 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](https://www.incometax.gov.in/iec/foportal/latest-news?mobile-app=1%2Fe-Campaigns%2Fe-mail%2Fe-Campaigns%2Fe-mail%2Flatest-news%2Flatest-news%2Fhelp%2Fhow-to-authorize-signatory%2Fhelp%2Fmy-bank-account%2Fe-Campaigns%2Fe-mail%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Flatest-news%2Flatest-news%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg&utm_source=openai))
## 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](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/itr-b/itr-b-UM?utm_source=openai))
- 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](https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/itr-b/itr-b-UM?utm_source=openai))
## 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](https://www.incometax.gov.in/iec/foportal/latest-news?mobile-app=1%2Fe-Campaigns%2Fe-mail%2Fe-Campaigns%2Fe-mail%2Flatest-news%2Flatest-news%2Fhelp%2Fhow-to-authorize-signatory%2Fhelp%2Fmy-bank-account%2Fe-Campaigns%2Fe-mail%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Flatest-news%2Flatest-news%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg&utm_source=openai))
- 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](https://www.incometax.gov.in/iec/foportal/latest-news?mobile-app=1%2Fe-Campaigns%2Fe-mail%2Fe-Campaigns%2Fe-mail%2Flatest-news%2Flatest-news%2Fhelp%2Fhow-to-authorize-signatory%2Fhelp%2Fmy-bank-account%2Fe-Campaigns%2Fe-mail%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Flatest-news%2Flatest-news%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg%2Flatest-news%2Fthemes%2Fcustom%2Fitdbase%2Fimages%2Fmobile-logo.svg&utm_source=openai))
## Steps to Stay Compliant with the New Rules
1. **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.
2. **Collect full documentation for block period**: income sources, assets (especially foreign or digital), TDS/TCS certificates, bank statements.
3. **Check your IFSC unit status**: if paid incomes of types exempted, ensure payer is applying the non-deduction correctly.
4. **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.