CBDT Eliminates Arrest and Detention Provisions From Income-tax Recovery Rules With Retrospective Effect:

The Central Board of Direct Taxes (CBDT) under the Ministry of Finance has introduced the Income-tax (Fourth Amendment) Rules, 2026, after completely eliminating the provisions of arrest and detention from the tax recovery rules in case when the defaulter is no longer alive, with retrospective effect from April 01, 2026. The board has directed the tax officials not to undertake any arrest.

The aforementioned decision has been officially announced vide a Notification dated September 17, 2026. The said amendment has been introduced in accordance with the Budget 2026-27 announcement of decriminalisation of technical defaults such as non-production of books of account and documents, and payment of TDS.

The Union Budget presented on February 01, 2026, had explicitly mentioned that minor offences will attract a penalty and not prosecution. Now, the board has introduced an amendment in Rule 225 of the Income-tax Rules, 2026, which concerns recovery of tax arrears, specifically through the attachment and sale of movable and immovable property.

The already existing valuers and authorised income-tax practitioners have been granted an additional time limit of six months (till March 31, 2027) to complete their registration under the new Income-tax Act, 2025 framework.

Form 169 is used to seek registration as valuers under Section 514 of the Income-tax Act, 2025. To complete the registration process, details such as PAN, contact details, educational qualifications, professional certifications, relevant valuation experience and the class of assets. Similarly, Form 171 is used to seek registration as authorised income-tax practitioners under Section 515 of the Income-tax Act, 2025.