The Finance Bill, 2026 proposes a key change to the limitation framework for completing block assessments under section 296 of the Income-Tax Act, 2025. Currently, the time limit is linked to the execution of the last search authorisation or requisition, which can result in different limitation dates for entities within the same searched group. To address this inconsistency and facilitate coordinated investigations, it is proposed to shift the reference point to the initiation of search or requisition. Correspondingly, the time limit for completing block assessment is proposed to be extended from twelve months to eighteen months from the end of the quarter in which the search is initiated or requisition is made. This uniform reference date is intended to bring clarity, consistency, and administrative efficiency in group search cases. The amendment will apply to searches initiated or requisitions made on or after 1 April 2026 and will govern assessments from tax year 2026–27 onwards.
Referencing the time limit to complete block assessment to the initiation of search or requisition
Section 296 of the Act, provides for time limit for completing a block assessment. An assessment or reassessment order under Section 294 (procedure for block assessment) must be completed within 12 months from the end of the quarter in which the last search authorization was executed or requisition was made.
2. Further, it is considered that use of last date of authorisations as reference for deciding date of limitation lead to different date of limitations in case of group being searched. As search and seizure proceedings are more often conducted in a group of cases which require coordinated investigation and assessments.
3. Accordingly, it is proposed to amend the section 296 of the Act so as to take the date of initiation of search as the reference point to decide the date of limitation for block assessment where any search has been initiated or requisition is made in the case of any person and consequently, the period of twelve months is proposed to be to eighteen months to complete such assessment in case of such person.
4. This amendment will take effect from the 1st day of April, 2026, for search or requisition is initiated or made as the case maybe, on or after 1st day of April, 2026.
[Clause 65]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 65 of the Bill seeks to amend section 296 of the Income-tax Act, 2025 relating to time-limit for completion of block assessment.
Section 296 of the Act, provides for time-limit for completing a block assessment. An assessment or reassessment order under section 294 (procedure for block assessment) must be completed within twelve months from the end of the quarter in which the last search authorization was executed or requisition was made. While, the time-limit for completion of block assessment of any other person shall be twelve months from the end of the quarter in which the notice under section 294 in pursuance of section 295, was issued to such other person.
It is proposed to amend the said section so as to take the date of initiation of search as the reference point to decide the date of limitation for block assessment and consequently, the period of twelve months is proposed to be to eighteen months from the end of the quarter in which search was initiated or requisition was made.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in relation to the tax year 2026-2027 and subsequent years.
Extract of Relevant Amendment Proposed by Finance Bill, 2026
65. Amendment of section 296.
In section 296 of the Income-tax Act, for sub-section (1), the following sub-section shall be substituted, namely:––
“(1) Irrespective of the provisions of section 286, the order under section 294 shall be passed within eighteen months from the end of the quarter in which the search was initiated or requisition was made.”.
