Recent Legislative Changes
- Income-tax (Third Amendment) Rules, 2026 – Notification No. 97/2026: Introduced Form ITR-BN and amended Rule 332 by inserting Appendix IV to govern returns in search & requisition cases. Effective from 1 April 2026. (incometax.gov.in)
- New ITR Utilities and Forms: The Income Tax Department has released Excel utilities for ITR-7, ITR-5 and statutory forms for AY 2026-27. Quarterly Forms like 121, 138, 140, etc., are now live. (incometax.gov.in)
Key Compliance Implications
Who is Affected?
- Taxpayers subject to search or requisition proceedings under the Income Tax Rules.
- Individuals and entities required to file ITRs using newer forms (ITR-5, ITR-7, and ITR-BN).
- All taxpayers in India, especially with cross-border exposure or significant transactional volume.
What Must Be Done Differently?
- Use of ITR-BN: Cases under search & requisition must file using ITR-BN with Appendix IV. Details of how the income/disclosures associated with search & requisition are declared must follow prescribed formats. (incometax.gov.in)
- Filing deadlines remain unchanged: AY 2026-27 returns due dates as usual for audit/non-audit cases; ensure forms are used properly. (incometax.gov.in)
- New statutory forms must be uploaded via the e-filing portal; offline and online utilities updated July 2026. (incometax.gov.in)
Example to Illustrate: Search Case Return Filing
- Example: An entity subjected to requisition under Income-tax Rules conducts business involving documents requested by tax authorities.
- It must now use Form ITR-BN and append Appendix IV describing the requisition outcome, any adjustments, and disclosures(“search & requisition” sort of proceedings). Forms without Appendix IV could be rejected or considered defective.
- Other tax liabilities, deductions remain per Act 2025 (if applicable) or old Act depending on relevant dates.
Actionable Checklist for Compliance
| Task | Deadline | Responsible Party |
|---|---|---|
| Identify whether your case is under search / requisition | Immediately, if proceedings served | Legal / Tax Department |
| Determine correct ITR form (ITR-BN or other) | Before filing due date | Tax Accountant |
| Download and verify latest utilities/forms | Before starting filing | Business Finance Team |
| Complete Appendix IV with required disclosures for cases under search/requisition | With filing of ITR-BN | Entity/Taxpayer |
| Keep records of notification (Rule 332 amendments) and guidance documents | Always | All affected parties |
Conclusion
The Indian government’s July 2026 updates push for more transparency and systemic compliance by formalizing return forms and expanding data collection in search/requisition cases. Taxpayers must adapt their internal processes and form usage to avoid penalties and defects in submissions.