Section 296 Income Tax Act 2025: What Is the Time Limit for Block Assessment?
Section 296 fixes the statutory time limit for completion of block assessments after an income-tax search or requisition. The deadline depends on the date of search, whether the assessee is an "other person", and applicable statutory extensions and exclusions.
What does Section 296 provide?
Section 296 of the Income-tax Act, 2025, titled Time-limit for completion of block assessment, sets the outer time limits for passing an order under Section 294. It applies notwithstanding the ordinary assessment-completion limits under Section 286. The block assessment procedure is used in search and requisition cases governed by the special provisions of the Act.
Section 296 time limits at a glance
| Situation | Basic period | Provision |
|---|---|---|
| Searched or requisitioned person | 18 months from end of quarter of initiation of search or requisition | 296(1) |
| Reference under Section 166(1) | Additional 12 months | 296(2) |
| Other person under Section 295 | 12 months from end of quarter in which relevant Section 294 notice was issued | 296(5) |
| Other person with Section 166(1) reference | Additional 12 months | 296(6) |
These are starting rules, not unconditional final dates. Exclusions under subsections (3) and (7), and the extensions under subsections (4), (8) and (9), may alter the actual deadline.
Explanation of Section 296(1) to (9)
Section 296(1): Eighteen-month deadline
The order under Section 294 must ordinarily be passed within 18 months from the end of the quarter in which the search was initiated or requisition was made. The Finance Act, 2026 replaced the earlier 12-month formulation tied to execution of the last search authorisation. The operative text must be applied to the relevant proceeding and commencement provisions.
Section 296(2): Transfer pricing reference
Where a reference is made under Section 166(1) during the block assessment or reassessment, the available period is extended by 12 months.
Section 296(3): Handover of seized material
The period between initiation of search or requisition and handover of specified seized or requisitioned assets and material to the jurisdictional Assessing Officer is excluded, subject to a maximum exclusion of 180 days.
Section 296(4): End-of-month adjustment
Where the deadline remaining after the exclusion under subsection (3) would expire before the end of a month, it is extended to the end of that month.
Section 296(5): Assessment of another person
For an "other person" covered by Section 295, the ordinary limit is 12 months from the end of the quarter in which the Section 294 notice issued in pursuance of Section 295 was issued to that person.
Section 296(6): Transfer pricing for another person
Where a Section 166(1) reference is made in an other-person case covered by subsection (5), a further 12 months is available.
Section 296(7): Other excluded periods
Specified periods are excluded when computing limitation. These include:
- Time covered by a court stay, ending upon receipt of the certified order vacating the stay by the jurisdictional Principal Commissioner or Commissioner.
- Time spent on an international exchange-of-information request under Section 159, capped as prescribed.
- Time taken for rehearing following a change of incumbent under Section 244(2).
- Specified periods connected with special audit or inventory valuation under Section 268(5).
- Time spent on a Valuation Officer reference under Section 269(1).
- Specified approval, violation, and reference proceedings under Sections 270 and 351.
- Specified proceedings relating to an impermissible avoidance arrangement under Section 274.
- Specified periods concerning applications to the Board for Advance Rulings under Sections 383 and 384.
Each exclusion has its own statutory starting and ending events. The complete statutory wording should be checked when calculating an actual deadline.
Section 296(8): Minimum remaining 60 days
If immediately after exclusions under subsection (3) or (7), the remaining period under subsection (1) or (5) is less than 60 days, it is extended to 60 days.
Section 296(9): Final month-end extension
Where the deadline after the subsection (8) extension falls before the end of a month, it is extended to the end of that month.
Relevant statutory terms
Practical illustrations
Example 1: Search initiated on 10 May 2026
The relevant quarter ends on 30 June 2026. Adding 18 months gives a basic deadline of 31 December 2027, assuming no applicable extension, exclusion, or transitional issue.
Example 2: Notice to another person issued on 20 August 2026
The relevant quarter ends on 30 September 2026. The basic 12-month deadline under subsection (5) is 30 September 2027, subject to applicable extensions and exclusions.
Example 3: Transfer pricing reference
If the requirements of Section 296(2) are satisfied, the period otherwise available for the searched person's block assessment is extended by 12 months. Separate excluded periods may still require calculation.
Frequently asked questions
Is the block assessment time limit 12 months or 18 months?
Following the Finance Act, 2026 substitution effective 1 April 2026, Section 296(1) specifies 18 months from the end of the quarter of search initiation or requisition. Section 296(5) separately specifies 12 months for another person under Section 295.
Does a court stay affect limitation?
Yes. The specified court-stay period is excluded under Section 296(7)(a), subject to the statutory receipt-of-order rule.
Can the deadline be extended by 12 months for transfer pricing?
Yes, where a qualifying reference under Section 166(1) is made and the conditions of Section 296(2) or (6) are satisfied.
What if only 20 days remain after an excluded period?
Where subsection (8) applies, the remaining period is extended to 60 days. Subsection (9) may then extend the resulting deadline to the end of that month.
Is Section 296 the same as Section 286?
No. Section 286 addresses general assessment and reassessment completion limits. Section 296 sets special limits for block assessment under Section 294.
Official statutory source
Read the Income-tax Act, 2025, as amended by the Finance Act, 2026 (official PDF). This article is explanatory; statutory wording, commencement rules, notifications and binding judicial decisions govern individual cases.
Last updated: 11 November 2026.