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FinoPulse — Daily Edition
August 6, 2026
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CBDT Notifies ITR-BN: The New Block Return for Search & Requisition Cases
Under the Income-tax Act, 2025 — effective retrospectively from 1 April 2026
CBDT has notified the Income-tax (Third Amendment) Rules, 2026 (Notification G.S.R. 656(E), dated 24 July 2026), inserting Appendix IV into Rule 332 and prescribing a new return form — ITR-BN — for block-period assessments arising from search or requisition action under the Income-tax Act, 2025. The rules apply retrospectively from 1 April 2026 to searches initiated under Section 247 or requisitions under Section 248 of the new Act.
What Changes
A dedicated block-assessment return now exists under the 2025 Act framework — this did not have a direct standalone-form equivalent in the same shape under the old regime’s rules. The form requires the date of initiation of search/requisition, the date the last search authorisation was executed, the block period, particulars of the notice issued under Section 294, and the due date for filing.
Undisclosed income for the block period must be computed and disclosed year-wise — separating income already assessed, income already disclosed in earlier returns, and income relating to each segment of the block period. That granularity is now built into the return’s structure, not left to supporting schedules.
For assessees subject to search or requisition on or after 1 April 2026, the block-return computation is now a distinct, structured exercise rather than a modification of the standard ITR. Build a year-wise reconciliation working paper — assessed income vs. disclosed income vs. undisclosed income — into every search-case engagement opened under the new Act, since the form demands that granularity directly.
Rule 332, Appendix IV — Income-tax Rules, 2026
Notification G.S.R. 656(E), dated 24 July 2026
RBI’s Draft Foreign Investment Rules, 2026: The NDI Rules Get a Ground-Up Rewrite
Comments due 31 August 2026 — this changes how FDI advisory checklists get built
On 21 July 2026 (Press Release No. 2026-2027/726), the RBI released draft Foreign Exchange Management (Foreign Investment) Rules, 2026, proposing to replace the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (NDI Rules) in their entirety. The stated aim is a simpler, more transparent, investee-centric framework, following a commitment made in the Union Budget 2026-27. Public comments are open until 31 August 2026 via the RBI’s “Connect 2 Regulate” portal or by email.
What Changes
The headline shift is structural: from investor-centric to investee-centric regulation. The existing NDI Rules organise obligations primarily by category of investor — a person resident outside India, an NRI, an OCI. The draft reorganises the entire framework around the investee entity instead — the Indian company receiving the investment — rather than who’s sending the money in.
Alongside that, the draft proposes land-border restrictions removed compared to the currently stringent Press Note 3 (2020)-linked regime for investment from bordering countries (subject to final confirmation on scope), rationalised and harmonised definitions to reduce the interpretive overlaps that have historically caused NDI-Rules compliance disputes, and a clearer separation between core FEMA procedural requirements and policy/sector-specific conditions — meant to let sector policy change without requiring a FEMA rules amendment each time.
If finalised in anything close to the draft form, this is a significant compliance-architecture change for any practice advising on inbound FDI — client-facing checklists organised around “is my client a resident/NRI/OCI investor” would need rebuilding around the investee entity’s classification instead. Firms with clients currently navigating land-border-linked investment restrictions should watch this closely — that provision is one of the most consequential, and most likely to be contested or refined, before finalisation.
Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 — proposed to be replaced
Draft Foreign Exchange Management (Foreign Investment) Rules, 2026 — RBI Press Release No. 2026-2027/726, dated 21 July 2026
Comment deadline: 31 August 2026, via “Connect 2 Regulate” or email
New integrated payment module live on the e-filing portal (spans the 1961 and 2025 Acts) · AIS now shows Foreign Asset Information directly · ITR-5 (online) and ITR-6 (Excel utility) available for AY 2026-27.
10 Aug — GSTR-7 & GSTR-8
11 Aug — GSTR-1 (Monthly)
Under the Income-tax Act, 2025, which section governs “requisition” (as distinct from “search”) for triggering block-assessment proceedings?
Answer: Section 248 — see today’s lead story above.
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