What is ITR-BN and the Rule 332 changes?
- The Income-tax (Third Amendment) Rules, 2026 introduce Form ITR-BN, specifically designed for search and requisition cases, i.e. where the tax authorities have carried out searches or requisitions under Indian tax law. These changes come under Rule 332, involving insertion of Appendix IV to govern returns in such cases. (incometax.gov.in)
- These amendments are effective from 1 April 2026, i.e. Assessment Year 2026-27 onwards. Filers in cases involving search/requisition activities must use ITR-BN. (incometax.gov.in)
Implications for Cross-Border Professionals & Diaspora
- If foreign income, foreign assets, or any overseas bank accounts are involved in a search or requisition, the new form and appendix impose stricter disclosure obligations.
- Non-resident Indians (NRIs) or Indian residents with foreign interests must ensure accuracy — mis-reporting can trigger penalties and delays.
- Since the Annual Information Statement (AIS) now includes foreign asset and CRS/FATCA information, mismatches may surface. Authorities may initiate search/requisition or issue notices based on data in AIS. (incometax.gov.in)
What actions should you take?
- Review past searches or requisitions: If you received notice of a search/requisition, consult with a tax advisor and prepare to use ITR-BN when filing returns from AY 2026-27.
- Gather all documentation: bank statements, foreign assets, correspondence related to searches, requisitions, or audits.
- Be transparent in your AIS responses: make sure the assets and incomes are clearly covered in schedules; avoid surprises.
- Stay updated on DTAA claims: some treaty benefits may be impacted if the income is subject to search or related orders.
- Seek advance rulings: where complex treaty or transfer pricing issues arise, obtain clarity ahead of filing.
Example
Suppose an Indian-resident consultant has foreign royalty income and is subject to a requisition under investigation. They would use ITR-BN to report income, disclose assets, mention the requisition details per Appendix IV, and reconcile AIS data. Using old forms may lead to non-compliance.
Key takeaways
- ITR-BN and Appendix IV under Rule 332 are now mandatory for search/requisition cases from AY 2026-27.
- Cross-border professionals must ensure complete disclosure of foreign assets/income, aligning with AIS and DTAA benefits.
- Mistakes or omissions can lead to penalties or scrutiny — better to adopt robust record-keeping and seek professional advice early.
By proactively adjusting to India’s new rules under the Third Amendment, cross-border professionals protect themselves from non-compliance, while making full use of treaty protections where applicable.