Block Assessment Tax and GDR Tax Rates: Sections 192 and 193 of the Income Tax Act 2025

Two sections of the Income-tax Act, 2025 set special tax rates outside the normal slabs. Section 192 taxes the total undisclosed income of a "block period" at 60% (plus any surcharge) after a search or requisition. Section 193 taxes dividends on Global Depository Receipts (GDRs) at 10% and long-term capital gains on them at 12.5%, but only for a resident employee of an Indian company in a specified knowledge based industry.

The first applies to a person who has been searched. The second applies to a narrow group of employees holding GDRs bought in foreign currency under an Employees' Stock Option Scheme. All figures below come from the Act as amended by the Finance Act, 2026, and the Income-tax Rules, 2026. Last reviewed on 10 November 2026.

What is block assessment under the Income Tax Act 2025?

Block assessment is a special assessment that follows a search (section 247) or a requisition of books, documents or assets (section 248). Under section 292(1), once a search is initiated or a requisition is made, the Assessing Officer assesses the total undisclosed income of the block period under this special Part, irrespective of any other provision of the Act.

Two definitions from section 301 matter here.

• Block period: the six tax years immediately before the tax year of the search or requisition, plus the period from 1 April of the tax year of the search up to the date the last of the authorisations is executed.
• Undisclosed income: money, bullion, jewellery, virtual digital assets or other valuables, expenditure, or income based on an entry in books or documents, that represents income or property which has not been or would not have been disclosed. It also includes any expense, exemption, deduction or allowance claimed that is found to be incorrect, for the block period.

The "last of the authorisations" is deemed executed, for a search, on the conclusion of the search as recorded in the last panchnama. For a requisition, it is the actual receipt of the books, documents or assets by the Authorised Officer (section 301(d)).

What is the tax rate under section 192?

Section 192(1) says that, irrespective of anything else in the Act, the total undisclosed income of the block period, determined under section 294, is chargeable to tax at 60%. Section 192(2) adds that the tax is increased by a surcharge, if any, levied by any Central Act. Section 292(7) confirms the charge applies as income of the block period, irrespective of the tax year or years to which the income relates.

How is the total undisclosed income of the block period worked out?

Section 293(1) makes it the total of two things: undisclosed income declared in the return furnished under section 294, and undisclosed income determined by the Assessing Officer under section 293(4). The Officer computes it on the basis of evidence found in the search, survey or requisition, and any other material or information available to or noticed by the Officer.

Section 293(2) keeps some income out of the block figure:

• Income already assessed or determined before the date of the search or requisition for a year in the block period.
• Income declared in a return filed before that date for such a year (and not covered by the return under section 294).
• Income computed by the assessee from entries in books and documents maintained in the normal course for three stretches: a tax year that has ended but whose return due date has not expired before the search; 1 April of the search year to the day before the search; and the search date to the date the last authorisation is executed (section 293(2)(c)).
• Income referred to in section 293(2)(d).

If the Assessing Officer thinks any part of the income computed by the assessee in the books-based stretches is actually undisclosed, the Officer may recompute it (section 293(3)).

What is the procedure after a search? Notice, return and time limits

The steps in section 294 are:

1. The Assessing Officer must take prior approval of the Additional Commissioner, Additional Director, Joint Commissioner or Joint Director before issuing the notice (section 294(3)).
2. The notice requires a return of undisclosed income for the block period within the period it specifies, not exceeding 60 days (section 294(1)(a)).
3. The return is in Form ITR-BN. A company files electronically under digital signature. Any other person files electronically under digital signature or by transmitting data under an electronic verification code (rule 180(1) and (2)).
4. The return is treated as a return under section 263, and a notice under section 270(8) follows. A return filed after the notice period is not deemed a return under section 263, and a person who has filed one cannot file a revised return (section 294(1)(a)(i), (ii), (iv)).
5. The Officer passes an assessment or reassessment order determining the tax payable. Section 275 does not apply to this order (section 294(1)(c)).

The 60 days can be extended by a further 30 days if all four conditions in section 294(1)(a)(v) hold: the due date of the return for the tax year just before the search year had not expired before the search; the assessee was liable to audit under section 63 for that year; those accounts were not yet audited when the notice was issued; and the assessee asks in writing for time to get them audited.

Where the claim is for credit of tax payments other than self-assessment tax for the block period, the credit is subject to verification by and satisfaction of the Assessing Officer (rule 180(4)).

What happens to other pending assessments and losses?

• Pending proceedings abate. Assessment, reassessment or recomputation proceedings under other provisions for a tax year in the block period, pending on the date of the search or requisition, abate on that date (section 292(2)(a)).
• Other income of the search year (not undisclosed income) of the year in which the last authorisation is executed is assessed separately under the other provisions (section 292(6)).
• Brought-forward losses and unabsorbed depreciation from before the first tax year of the block period cannot be set off against the undisclosed income. They can be carried forward to the tax year after the year in which the block period ends, for the remaining period, as per the Act (section 293(8) and (9)).
• Firms: the income assessed for each year in the block period is determined before deducting salary, interest, commission, bonus or remuneration to a partner who is not a working partner (section 293(6)(a)).

Worked example 1: tax on undisclosed income under section 192

Assumptions: a search is initiated on a trader in tax year 2026-27, and the last authorisation is executed in the same year. The Assessing Officer determines undisclosed income of the block period as below. Surcharge is ignored because the Act leaves its rate to other Central Acts.

Item	Rs
Unrecorded cash found during the search	40,00,000
Sales not entered in books, tax year 2023-24	25,00,000
Expense claimed in 2025-26 found to be incorrect	15,00,000
Total undisclosed income of the block period	80,00,000
Tax at 60% (section 192(1)): 80,00,000 x 60%	48,00,000
Surcharge, if any (section 192(2))	Added on top

The tax is charged as income of the block period, irrespective of the year each item belongs to (section 292(7)).

Worked example 2: brought-forward loss in a block assessment

Assumptions: a firm has a business loss of Rs 12,00,000 brought forward from before the first year of the block period. Its undisclosed income is Rs 30,00,000.

1. Undisclosed income of the block period: Rs 30,00,000.
2. Set-off of the brought-forward loss: nil, as section 293(8) bars it.
3. Tax at 60%: 30,00,000 x 60% = Rs 18,00,000, plus surcharge, if any.
4. The Rs 12,00,000 loss is not lost. It can be carried forward to the tax year after the year in which the block period ends, as per section 293(9).

Real-life scenarios

Ravi, a jeweller. A search at his shop ends in August 2026 and officers record unaccounted gold in the last panchnama. The search year is 2026-27, so his block period covers the six years before it plus 1 April 2026 to the date of that panchnama. The Assessing Officer, after prior approval, issues a notice giving him 60 days to file Form ITR-BN. Ravi files on day 55. His assessment tax is 60% on the undisclosed income found.

Anil, a trader whose accounts are unaudited. The search happens before the return due date for the preceding year has passed. Anil was liable to audit under section 63 and his accounts are not audited when the notice arrives. He writes to the Assessing Officer asking for time to get them audited, and the 60 days can be extended by 30 more days. If he had not asked in writing, the extension would not be available.

What is section 193? Tax on GDR income for resident employees

Section 193 is a special rate section for GDR income of a specific kind of taxpayer. It applies to an individual who is a resident and an employee of an Indian company engaged in a specified knowledge based industry or service, or an employee of its subsidiary engaged in such an industry or service (a "resident employee").

"Specified knowledge based industry or service" means information technology software, information technology service, entertainment service, the pharmaceutical industry, the biotechnology industry, or any other industry or service the Central Government notifies (section 193(4)(e)). "Subsidiary" has the Companies Act, 2013 meaning and includes a subsidiary incorporated outside India.

A Global Depository Receipt is a depository receipt or certificate created by an Overseas Depository Bank outside India or in an International Financial Services Centre, issued against ordinary shares of an Indian listed company, foreign currency convertible bonds, or certain foreign-company shares listed and traded in an IFSC (section 193(4)(a)).

Sl. No.	Income of the resident employee	Rate
1	Dividend on GDRs of an Indian company in a specified knowledge based industry or service, issued under an Employees' Stock Option Scheme notified by the Central Government and bought by the employee in foreign currency	10%
2	Long-term capital gains on transfer of those GDRs	12.5%
3	Total income reduced by Sl. No. 1 and 2	Rates in force

The extra rules in the section:

• If gross total income consists only of the GDR dividend, no deduction is allowed under any other provision (section 193(2)(a)).
• If it includes GDR dividend or gains, gross total income is first reduced by that income, and deductions are allowed as if the reduced figure were the gross total income (section 193(2)(b)).
• Section 72(6), the currency-conversion method for non-residents' gains on shares and debentures of Indian companies, does not apply to these GDR gains (section 193(3)).

Worked example 3: tax under section 193

Assumptions: Meena is a resident employee of an Indian software company. In tax year 2026-27 she receives dividend of Rs 20,000 on GDRs bought in foreign currency under a notified ESOP scheme, and sells some of them for a long-term capital gain of Rs 3,00,000. Her other income is Rs 9,00,000.

Income	Amount (Rs)	Rate	Tax (Rs)
GDR dividend	20,000	10%	2,000
Long-term capital gain on GDRs	3,00,000	12.5%	37,500
Other income (Rs 9,00,000)	9,00,000	Rates in force	At normal rates
Tax on GDR income			39,500

Her deductions are worked out against the Rs 9,00,000 left after removing the GDR income (section 193(2)(b)). Surcharge and cess are not covered here.

Real-life case: Meena's colleague Suresh holds shares of the same company that he bought in rupees through a normal brokerage account. Section 193 requires GDRs issued under the notified scheme and purchased in foreign currency, so his holding would not qualify for these rates. Check the exact facts before applying the section.

Common mistakes

1. Treating section 192 as a slab-rate assessment. The 60% rate applies irrespective of anything else in the Act, and the surcharge comes on top.
2. Missing the 60-day return window. A return filed after the notice period is not a return under section 263, and no revised return is allowed.
3. Expecting old losses to reduce the block income. Brought-forward losses and unabsorbed depreciation from before the block period cannot be set off against undisclosed income.
4. Forgetting the other income of the search year. It is assessed separately under the other provisions (section 292(6)).
5. Applying section 193 to any GDR holder. It needs a resident individual employee of a knowledge based company or its subsidiary, a notified ESOP scheme and a purchase in foreign currency.
6. Claiming other deductions when only GDR dividend exists. Section 193(2)(a) bars them.

Quick reference

Point	Section 192 (block assessment)	Section 193 (GDR)
Who	Person searched or whose assets or books are requisitioned	Resident individual employee of a knowledge based company or subsidiary
Rate	60% plus surcharge, if any	10% on dividend, 12.5% on long-term capital gains
Return	Form ITR-BN within the notice period of up to 60 days (extension of 30 days possible)	GDR income is taxed at these rates within total income
Losses	Brought-forward losses cannot be set off	Section 72(6) conversion method does not apply

Where this is in the Act

• Section 192: tax in case of block assessment of search cases.
• Sections 292 to 294: assessment of undisclosed income, computation, and procedure.
• Section 301: definitions of block period and undisclosed income.
• Rule 180 of the Income-tax Rules, 2026: Form ITR-BN.
• Section 193: tax on income from GDRs purchased in foreign currency or capital gains from their transfer.

For another worked guide under the new Act, see TDS on rent under the Income-tax Act, 2025. If you handle notices and deadlines for clients, Finexo's practice management software helps a CA firm track notice dates and client follow-ups in one place. It does not prepare the return or advise on the case.

This article explains the Income-tax Act, 2025 (as amended by the Finance Act, 2026) and the Income-tax Rules, 2026. It is general information, not tax advice. Confirm the position for a specific case with a qualified chartered accountant.