Budget 2024-25: FM proposes New Block Assessment Scheme for Search Cases

The Union Finance Minister Nirmala Sitharaman while presenting her seventh straight budget on 23rd July 2024 introduced a notable relief to taxpayers as tax authorities can no longer reopen income tax returns beyond the specified time limit.

By the new proposal it aims to simplify the provisions relating to the reopening and the reassessment year. An assessment herein after can be reopened beyond three years from the end of the assessment year only if the escaped income is Rs.50 lakhs or more, up to a maximum period of 5 Years from the end of the assessment year.

Even in case of search cases, a time limit of 6 Years of search, against the existing time limit of 10 Years is proposed. This helps in reducing the tax-uncertainty and disputes.

According to Section 147 of the Income Tax Act, 1961 the Income Tax Department can reassess an individual's previously filed income tax returns. After sending a notice under Section 148 of Income Tax Act and fulfilling some criterias the reassessment can be done.

If the Tax department disagrees with the taxpayers assessment and believes that some income has not been properly assessed then according to Section 148A, the assessing officer should conduct an inquiry on the same and give the taxpayer an opportunity to explain the case before issuing a notice under Section 148.

Normally, a notice cannot be issued if 3 years have passed since the end of the relevant assessment year. But, if the tax evaded is at least Rs.50 lakhs, then a notice can be issued even after 3 years but within 10 years from the end of the relevant assessment year. But this may cause uncertainty and disputes due to the long period. So a solution to this new block assessment scheme has been introduced.

In case of search cases a new scheme of block assessment is introduced, the block period is proposed to be six previous years and the period upto the date of conclusion of search. Total income of the block period is proposed to be taxed at the rate of 60 percent.

To Read the full text of the Finance Bill CLICK HERE

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