Tax Return Preparer Scheme: Who Can Use It Under the Income Tax Act 2025 (Section 264)

Section 264 of the Income-tax Act, 2025 lets the Board notify a Scheme under which certain taxpayers can prepare and file their returns of income through an authorised tax return preparer. The Act only creates the power. The actual eligibility rules, authorisation process and fees come from the Scheme itself, which has to be notified. The section text does not contain the Scheme itself, so this guide covers what the section says and leaves the Scheme's mechanics out.

Facts below come from section 264, with section 263 (return of income), section 63 (tax audit), section 515 (authorised representatives) and section 534 (laying before Parliament) read alongside, as amended by the Finance Act, 2026. Last reviewed against that text on 10 November 2026.

What does section 264 of the Income Tax Act 2025 say?

Section 264(1) allows the Board to make a Scheme for furnishing returns of income through a tax return preparer. The Scheme must be notified. It may:

• enable a specified class or classes of persons to prepare and furnish returns through a tax return preparer authorised under the Scheme (section 264(1)(a)); and
• be made irrespective of section 263 (section 264(1)(b)), the general section on who must file a return and how.

The word "may" matters. Nothing in the section obliges the Board to make a Scheme, and nothing obliges a taxpayer to use one.

Who is a tax return preparer?

Under section 264(2)(a), a tax return preparer is an individual who has been authorised to act as one under the Scheme. Two kinds of individuals are excluded:

• a person referred to in section 515(3)(a)(ii), which is an officer of a scheduled bank with which the assessee keeps a current account or has other regular dealings; and
• an employee of the specified class or classes of persons, that is, an employee of the taxpayer being served.

A firm or company cannot be a tax return preparer under this definition. Only an individual can be.

Which taxpayers can use the Scheme?

Section 264(2)(b) defines the "specified class or classes of persons" as any person who is required to furnish a return of income under the Act, other than:

• a company; or
• a person whose accounts are required to be audited under section 63 or under any other law.

Taxpayer	Inside the specified class?	Reason
Salaried individual who must file a return	Yes	Required to file, not a company, no audit
Small trader whose accounts are not audited	Yes	Required to file, no audit requirement
Private limited company	No	A company is excluded
Proprietor whose accounts must be audited under section 63	No	Audit under section 63 excludes the person
Person audited under another law	No	"Any other law" audit also excludes
Person with income below the filing threshold and no other filing trigger	No	Not required to furnish a return under section 263

For the tax audit limits that decide who falls under section 63, see our guide to tax audit under the Income-tax Act, 2025. For who has to file at all, see who must file a return and the due dates.

How does the Scheme fit with section 263?

Section 263 sets who must file, the due dates, the revised return window and the defective return rules. Section 264(1)(b) says the Scheme can be made irrespective of section 263. In plain terms, the Scheme can set its own way of preparing and furnishing the return for the specified class without being bound by every procedural detail of section 263. The Act text does not say which details the Scheme will change, so check the notified Scheme itself.

A "No" at the first question, or a "Yes" at the company or audit question, takes the person outside the specified class.

Two worked eligibility examples

This topic has no tax rates or limits to compute, so these examples walk the section 264(2)(b) test step by step. Both assume tax year 2026-27 and that a Scheme has been notified that covers the class.

Step	Example 1: Ravi, salaried with rental income	Example 2: Meena, trader
1. Must he or she file a return?	Yes, under section 263(1)(a)(iii) because income exceeds the exemption limit	Yes, same clause
2. Company?	No	No
3. Audit required under section 63 or any other law?	No	Yes, her accounts must be audited under section 63
Result	In the specified class	Outside the specified class

Two real-life situations

Situation 1. Ravi is a salaried employee with a small house rent income. He has no business and no audit. If a notified Scheme covers his class, he could use an authorised preparer under it. A friend, Suresh, has no authorisation under the Scheme. Suresh does not become a tax return preparer by helping; the definition in section 264(2)(a) needs authorisation under the Scheme.

Situation 2. Meena runs a trading business large enough that her accounts are required to be audited under section 63. Even if the Scheme exists, she is outside the specified class. Her return would continue to be furnished the usual way under section 263, with the audit report required there.

How is this different from an authorised representative under section 515?

Section 515 lets an assessee appoint an authorised representative, such as a chartered accountant or a legal practitioner, to attend before an income-tax authority or the Appellate Tribunal in a proceeding. Section 264 is about preparing and furnishing the return under a notified Scheme. The two sit in different parts of the Act and serve different purposes, and a bank officer described in section 515(3)(a)(ii) is carved out of the preparer definition.

Does the Scheme need Parliament's attention?

Yes. Section 264(3) says every notification for the Scheme is issued as per section 534. Section 534(c) requires notifications under section 264 to be laid before each House of Parliament for a total of thirty days. If both Houses agree to modify it or agree it should not be issued, it has effect only in the modified form or not at all, without affecting anything already done under it.

What are the common mistakes about the Scheme?

• Assuming the Scheme is already running. Section 264 is an enabling power. Eligibility and authorisation depend on a notified Scheme.
• Treating a firm or company as a preparer. Only an individual can be authorised.
• Forgetting the audit exclusion. A person audited under section 63 or any other law is outside the class.
• Assuming companies can use it. Section 264(2)(b) excludes them.
• Confusing preparer and representative. Section 515 representation before authorities is a different role.
• Assuming the filing duty moves. The person must still be one who is required to furnish a return; the Scheme changes how the return is prepared and furnished, not whether it is due.

Where is this in the Act?

• Section 264(1): power to make the Scheme, irrespective of section 263
• Section 264(2)(a): tax return preparer
• Section 264(2)(b): specified class or classes of persons
• Section 264(3) and section 534(c): notification and laying before Parliament
• Section 263: return of income
• Section 63: tax audit
• Section 515(3)(a)(ii): bank officer excluded from the preparer definition

How can a CA firm prepare for the Scheme?

For a practice, the useful step is to know which clients are required to file, which have audits and which do not. That list decides who could fall in the specified class if a Scheme is notified. Finexo's practice management software keeps your client list, filing status and deadlines in one place so you can sort clients by these attributes. It does not file returns for you.

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