CBDT amends Income Tax Rules to Include ‘Block Period’ in Demand Notice Format

The Central Board of Direct Taxes (CBDT) under the Ministry of Finance issued Notification No. G.S.R. 553(E) dated August 14, 2025, announcing the Income-tax (Twenty-First Amendment) Rules, 2025.

These amendments update the Income-tax Rules, 1962 to make procedural changes in Form No. 7, which is used for issuing notices of demand under Section 156 of the Income-tax Act, 1961. The revised rules will come into effect from September 1, 2025.

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Under the existing provisions, Form No. 7 referred only to the “assessment year” when specifying the demand amount. This limited the form’s applicability to regular annual assessments. The new amendment replaces the words “assessment year…….a sum” with “assessment year……… or the block period………., as the case may be, a sum”.

This change means that Form No. 7 can now be used not only for a specific assessment year but also for a block period, a term used in search and seizure assessments under the Income-tax Act, where the assessment covers multiple years as a single block rather than individually.

By making this change, the CBDT has ensured that the notice of demand format is flexible and legally valid for both regular and block period assessments. This helps avoid the need for separate formats, reduces administrative complications, and ensures uniformity in tax recovery notices.

The amendment is procedural in nature but is important for maintaining consistency and legal clarity in the Income-tax Department’s operations, especially in cases arising out of search actions where tax demands relate to a block of years rather than one specific year.

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