Finance Bill, 2025 Notifies Major Amendments in Chapter XIV-B of Income-Tax Act 1961 [Read Bill]

The Income-tax Act of 1961's Chapter XIV-B was amended by the Finance Bill of 2025, which also redesigned the method for block assessments and placed more emphasis on figuring out concealed income. With their emphasis on transparency and targeted taxes, these modifications represent a significant departure from the previous income tax structure.

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Assessment of Undisclosed Income

The evaluation of total unreported income has now taken the place of the evaluation of total income.  The change guarantees that undeclared earnings are the primary target of search and requisition activities.  Furthermore, the block evaluation now includes the ongoing abatement processes during the block period.  This enables the Assessing Officer (AO) to use search results, evidence that has been requisitioned, and other pertinent documents to calculate unreported income.  Regular revenue will still be determined using traditional bookkeeping records, though.

Key Amendments to Specific Sections

Section 158BA clarifies the emphasis on unreported earnings by substituting "total undisclosed income" for "total income" in the marginal heading and subsections (1) and (7).

 A structured method that separates disclosed and hidden income is now used to calculate total undisclosed income under section 158BB. The total undeclared income during the block period will consist of:

 income that was not disclosed but was reported on the return under section 158BC.

 unreported income as established by the AO in accordance with subsection (2).

Certain types of income, such as income calculated or assessed under particular laws such sections 143(1), 143(3), 144, 147, 153A, 153C, and previous block assessments, are expressly excluded from concealed income. It also includes income calculated using regularly kept books of accounts, income covered by special provisions such sections 115A(5), 115G, and 194P(1), and income reported in returns submitted under section 139 or in answer to notices under section 142(1) prior to the search.

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Section 158BC: Under this section, the taxpayer must furnish the block return within the specified time, not exceeding 60 days. If the due date for a previous year’s return has not expired, an additional 30 days may be granted for auditing books of accounts under the fifth proviso of section 158BC(1)(a).

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Section 158BD: The block period for another person covered under this section has been explicitly defined, ensuring consistency with the specified person’s block period. Abatement provisions have been clarified to account for cases where valuables or documents indicating undisclosed income are seized.

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Section 158BE : The time limit for completing a block assessment has been set at twelve months from the quarter in which the last search or requisition authorization was executed. If an additional 30-day extension is granted for block return filing, the time limit extends to thirteen months.

Section 113: The tax rate of 60% will now apply specifically to total undisclosed income rather than total income, aligning with the structural modifications in Chapter XIV-B.

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