In a move that targets ‘undisclosed income’ uncovered during tax searches or requisitions, the Ministry of Finance has now rolled out a new income tax return form, ITR-B, for the financial year 2025-26 (assessment year AY 2026-27).
The notification, dated April 7, 2025, explains the filing process for individuals and entities who are facing search or requisition operations by the Income Tax Department (ITD) on or after September 1, 2024.
Let’s understand in detail about this new form and its applicability to taxpayers.
What is ITR-B?
You may already know about regular income tax return (ITR) forms like ITR-1, ITR-2, and ITR-3, which are used to file returns for a single financial year.
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However, the new ITR-B form is specific to what’s called a ‘block assessment period.’ This means that taxpayers are required to disclose income for multiple previous years together if a search or requisition operation has taken place under Section 132 or Section 132A of the Income Tax Act, 1961.
When is ITR-B Applicable?
The return form is applicable in cases that fall under Section (u/s) 158BC, which deals with block assessments.
Block assessments are a method of computing total undisclosed income over a span of several years, usually following search or requisition actions by the tax authorities.
What is the Block Period?
This new ITR form covers income for a block period which would primarily consist of “Six Assessment Years (AY Y6 to AY Y1)” preceding the year in which the search or requisition was conducted.
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To put it simply:
AY Y0: Is the assessment year relevant to the year in which the search was initiated by tax authorities.
AY Y+1, if the search or requisition authorisation was carried out in the next financial year as well.
For instance, suppose a search was initiated in October 2024, in this case, the block period will cover income starting from AY 2029-20 (which is year 6) through to AY 2026-27 (Y+1), depending on when the final authorisation was executed.
What are the filing timelines and requirements?
As per the notification, the ITR-B form has to be filed within 60 days of receiving a tax notice following a search or requisition carried out by authorities.
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Electronic filing is mandatory for:
- Companies
- Political parties
- Individuals and firms whose accounts are required to be audited under Section 44AB
Other taxpayers (such as individuals) have the option to file electronically either using a digital signature or an electronic verification code (EVC).
Provisional Disclosures Are Allowed
In case the due date to file the regular ITR u/s 139(1) has not yet expired and books of account are not audited, the taxpayer has the option to submit provisional figures based on the available books.
But note that these disclosures need to eventually be included in the regular return u/s 139. Moreover, such kind of provisional disclosures under ITR-B does not count as a regular return for that particular assessment year (AY).
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This applies to both AY Y1 and AY Y0, provided those years fall within the scope mentioned above.
Are there any Exclusions?
The notification notes a specific carve-out: any undisclosed income related to international transactions or specified domestic transactions that fall u/s 158BB(3) have to be assessed separately under regular provisions and not through ITR-B.
Who will be overseeing ITR-B implementation?
The Principal Director-General (Systems) will oversee the digital infrastructure for ITR-B filings, this includes verification protocols and data security standards set by the government.
The new ITR-B form is a procedural but important development which has been brought into practice to tighten tax compliances and improve the accountability of individuals or businesses who face search or requisition operations by tax officials for ‘undisclosed income’.
While this may not directly affect the average taxpayer, it is significant for those who are facing the taxman’s scrutiny.
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