CBDT Introduces ITR-B for Block Assessment: Key Changes Under Income-tax (Third Amendment) Rules, 2026
Summary: The Central Board of Direct Taxes (CBDT), vide Notification No. 97/2026 dated 24 July 2026, has notified the Income-tax (Third Amendment) Rules, 2026. A significant change introduced through the notification is the introduction of Form ITR-B, along with amendments to Rule 332, prescribing the return of income in cases involving block assessment proceedings. The amendment assumes importance as the new Income-tax framework continues to introduce procedural mechanisms for handling search and requisition cases in a structured manner. Form ITR-B has been introduced for furnishing a return of income in cases where block assessment provisions become applicable pursuant to a search initiated or requisition made under the relevant provisions of the Income-tax Act, 2025. The amendment incorporates ITR-B as the prescribed form for such returns. For taxpayers and tax professionals, the change distinguishes regular tax-return obligations from disclosure requirements arising from block assessment proceedings and highlights the importance of maintaining proper books, supporting documents, transaction-level records and search-related evidence. The introduction of ITR-B represents another procedural development under the Income-tax Act, 2025, with its practical significance depending upon compliance with the new requirements.
Introduction
The Central Board of Direct Taxes (CBDT), vide Notification No. 97/2026 dated 24 July 2026, has notified the Income-tax (Third Amendment) Rules, 2026. A significant change introduced through the notification is the introduction of Form ITR-B, along with amendments to Rule 332, prescribing the return of income in cases involving block assessment proceedings.
The amendment assumes importance as the new Income-tax framework continues to introduce procedural mechanisms for handling search and requisition cases in a structured manner.
What is ITR-B?
Form ITR-B has been introduced for furnishing a return of income in cases where block assessment provisions become applicable pursuant to a search initiated or requisition made under the relevant provisions of the Income-tax Act, 2025.
Unlike an ordinary income-tax return, a block assessment return is specifically connected with proceedings arising from search or requisition. The introduction of a dedicated form therefore seeks to provide a standardised mechanism for reporting income covered by such proceedings.
Amendment to Rule 332
The Income-tax (Third Amendment) Rules, 2026 amend Rule 332 relating to the procedure and form for furnishing the return in block assessment cases. The amendment incorporates ITR-B as the prescribed form for such returns.
This is significant from a compliance perspective because taxpayers subject to search or requisition proceedings will need to distinguish between their regular tax-return obligations and the specific disclosure requirements arising from block assessment proceedings.
Why is the Amendment Important?
Search and requisition cases are inherently different from routine assessments because the proceedings may involve undisclosed income or information unearthed during departmental action. A separate return mechanism can help ensure that such information is reported in a structured manner.
For taxpayers, however, the introduction of ITR-B also highlights the importance of maintaining proper books, supporting documents and transaction-level records. In search-related proceedings, incomplete documentation may create additional difficulties in explaining the nature and source of income or assets.
For tax professionals, the new form will require careful examination of the period covered by the block assessment, the nature of income to be disclosed and the supporting evidence available with the assessee.
Practical Implications
The introduction of ITR-B represents another step towards creating a more defined procedural framework under the Income-tax Act, 2025. Taxpayers involved in search or requisition proceedings should not treat ITR-B as merely another compliance form. The information furnished through it may have a direct bearing on the determination of taxable income in block assessment proceedings.
Professionals should therefore ensure that the return is prepared after carefully reconciling search-related material, books of account, financial records and other relevant information.
Conclusion
The introduction of ITR-B through Notification No. 97/2026 marks an important procedural development in India’s direct-tax administration. While the form seeks to bring greater structure and standardisation to block assessment returns, its practical significance will ultimately depend upon how taxpayers and tax professionals interpret and comply with the new requirements.
As the Income-tax Act, 2025 and its accompanying rules continue to evolve, timely understanding of such procedural amendments will be essential for ensuring accurate compliance and reducing litigation risks.
