Section 113: Tax on Undisclosed Income in Block Assessment of Search Cases
Section 113 of the Income-tax Act, 1961 prescribes a 60% income-tax rate for the total undisclosed income of a block period determined under Section 158BC. The provision concerns special assessments following an income-tax search or requisition, not long-term capital gains. From 1 April 2026, the corresponding provision is Section 192 of the Income-tax Act, 2025, read with Section 294.
Section 113: Statutory provision under the 1961 Act
Heading: Tax in the case of block assessment of search cases.
The total undisclosed income of the block period, determined under section 158BC, shall be chargeable to tax at the rate of sixty per cent:
Provided that the tax chargeable under this section shall be increased by a surcharge, if any, levied by any Central Act.
The above reflects the text as amended by the Finance Act, 2025. The word "undisclosed" was restored retrospectively with effect from 1 September 2024 after its omission by the Finance (No. 2) Act, 2024. The earlier proviso's reference to the assessment year relevant to the search or requisition year was omitted with effect from 1 September 2024. Consult the applicable consolidated statute for the relevant period.
Meaning of important legal expressions
Block assessment
A block assessment is the special assessment process prescribed for certain search and requisition cases under Chapter XIV-B of the 1961 Act. It is distinct from an ordinary annual assessment and is governed by specific computation, notice and procedural provisions.
Undisclosed income
Undisclosed income is a defined statutory concept under Section 158B. Its application depends on the evidence and the definition applicable to the relevant search and block period. Not every difference in a return automatically qualifies as undisclosed income for block assessment.
Block period
The block period is determined under the statutory definition in Section 158B, as applicable to the search or requisition. For the reintroduced regime effective from 1 September 2024, it broadly encompasses specified preceding years and the relevant part of the year of search. The precise period must be checked against the applicable version of the Act.
Surcharge
Surcharge is an additional levy on income-tax when imposed by the relevant Central Act. Section 113 expressly permits such an addition; the amount cannot be assumed without checking the legislation governing the case.
How Section 113 works with the block assessment provisions
Section 113 provides the rate; the assessment procedure and determination of the taxable amount are found elsewhere. Key related provisions of the 1961 Act include:
- Section 132: Search and seizure powers.
- Section 132A: Requisition of books, documents or assets.
- Section 158B: Definitions relevant to block assessments.
- Section 158BA: Assessment of undisclosed income arising from search.
- Section 158BB: Computation of total undisclosed income.
- Section 158BC: Procedure for block assessment and the assessment order.
- Section 158BD: Assessment of undisclosed income relating to another person.
- Section 158BE: Time limits for completing block assessment.
- Section 158BFA: Interest and penalty provisions in specified cases.
The special block assessment framework was reintroduced for searches or requisitions initiated on or after 1 September 2024. The rules for earlier search cases may differ, and statutory amendments and savings provisions can affect proceedings begun before the 2025 Act came into force.
Illustrative calculation of tax under Section 113
Assume an assessment validly determines Rs 10,00,000 of total undisclosed income for the block period. The base tax calculation under Section 113 is:
| Particulars | Illustrative amount |
|---|---|
| Total undisclosed income assessed | Rs 10,00,000 |
| Income-tax at 60% | Rs 6,00,000 |
| Applicable surcharge, if any | Additional, subject to the relevant Central Act |
| Applicable cess, interest or penalty | To be examined separately under the relevant law |
This example illustrates only the statutory base rate; it does not assume a surcharge rate or calculate a final demand. The actual computation depends on the governing law and facts.
Section 192 of the Income-tax Act, 2025
The Income-tax Act, 2025 came into force on 1 April 2026. Its Section 192 is titled "Tax in case of block assessment of search cases" and provides:
Section 192(1): Irrespective of anything contained in any other provisions of this Act, the total undisclosed income of the block period, determined under section 294 shall be chargeable to tax at the rate of 60%.
Section 192(2): The tax chargeable under sub-section (1) shall be increased by a surcharge, if any, levied by any Central Act.
| Subject | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Tax rate on block undisclosed income | Section 113: 60% | Section 192: 60% |
| Block assessment procedure reference | Section 158BC | Section 294 |
| Additional surcharge | As levied by a Central Act | As levied by a Central Act |
For proceedings relating to earlier tax years or searches, examine the repeal, savings and transition provisions before determining which enactment governs the assessment. The mere renumbering of a section does not by itself resolve transitional questions.
Legislative background and amendment history
The block-assessment version of Section 113 was introduced by the Finance Act, 1995 with effect from 1 July 1995. An earlier Section 113 dealing with tax in the case of a non-resident had been omitted by the Finance Act, 1965 with effect from 1 April 1965. The surcharge proviso was introduced by the Finance Act, 2002 with effect from 1 June 2002. Later changes, including the Finance (No. 2) Act, 2024 and Finance Act, 2025, updated the provision for the revived block-assessment framework.
Frequently asked questions
What is the income-tax rate under Section 113?
The base income-tax rate is 60% on total undisclosed income determined for the block period under the applicable block-assessment procedure. Surcharge and other applicable levies may be additional.
Does Section 113 govern long-term capital gains?
No. Section 113 deals with taxation in block assessment of search cases. Long-term capital gains are addressed in other provisions, including Sections 112 and 112A of the 1961 Act.
What is the corresponding section in the Income-tax Act, 2025?
Section 192 of the Income-tax Act, 2025, which refers to the block-assessment determination under Section 294.
Does 60% include surcharge and cess?
No. The 60% figure is the base statutory income-tax rate. Surcharge, if levied, is additional, and other levies must be checked separately.
Are all search cases governed by the same procedure?
No. The search or requisition date, applicable statutory amendments, and transition provisions determine the relevant procedure and tax law.
Official legislation and references
- Income Tax Department: Income-tax Act, 1961 as amended by Finance Act, 2025 (PDF)
- Income Tax Department: Section 113, 1961 Act (2024 amendment text)
- Income Tax Department: Section 158BC, procedure for block assessment
- Income Tax Department: Income-tax Act, 2025 (official PDF, Section 192)
- Income Tax Department: Assessment and block assessment guidance
Updated 26 October 2026. This article is general legal information; the applicable statutory text, rules, notifications and case-specific facts govern.