Application of seized or requisitioned assets
[Section-250 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 250(1) of Income Tax Act 2025
250(1) The Assessing Officer may recover the tax liability (including penalty or interest payable other than advance tax) out of the assets seized under section 247 or requisitioned under section 248, and such liability shall be the aggregate of––
- (a) any existing liability under this Act, or under the Income-tax Act, 1961 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015;
- (b) any liability determined under this Act or under the Acts referred to in clause (a), up to the date of completion of the assessment or reassessment or recomputation in consequence to the search or the requisition;
- (c) any liability in respect of which such person is in default or deemed to be in default under this Act or under the Income-tax Act, 1961, determined on or after the completion of the assessment or reassessment or recomputation in consequence of the search or the requisition, and till the date of release of the assets; and
- (d) any liability arising on an application made before the Interim Board of Settlement under section 245C(1) of the Income-tax Act, 1961.
Section 250(2) of Income Tax Act 2025
250(2) The Assessing Officer may release the assets seized or portion of such asset to the person from whose custody the assets were seized, on an application made by the person concerned within thirty days from the end of the month in which the asset was seized, after fulfilment of the following requirements:––
- (a) satisfying himself about the nature and source of acquisition of any such asset;
- (b) recovering any existing liability referred to in sub-section (1);
- (c) obtaining prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
Section 250(3) of Income Tax Act 2025
250(3) The assets referred to in sub-section (2) shall be released within one hundred and twenty days from the date on which the last of the authorisations for the search or requisition was executed.
Section 250(4) of Income Tax Act 2025
250(4) If the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of the liabilities referred to in sub-section (1) and the assessee shall be discharged of such liability to the extent of the money so applied.
Section 250(5) of Income Tax Act 2025
250(5) The assets, other than money, may also be applied for discharge of liabilities referred to in sub-section (1) as remains undischarged and shall be deemed to be under distraint as if such distraint was effected by the Assessing Officer or Tax Recovery Officer under authorisation from the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner and the recovery of any liability out of such assets shall be effected in the manner as prescribed.
Section 250(6) of Income Tax Act 2025
250(6) The mode of recovery of liabilities under sub-section (1) shall not preclude the recovery of liabilities aforesaid by any other mode laid down in this Act.
Section 250(7) of Income Tax Act 2025
250(7) Any assets or proceeds thereof, which remain after the liabilities referred to in sub-section (1) are discharged shall be forthwith made over or paid to the concerned person.
Section 250(8) of Income Tax Act 2025
250(8) The Central Government shall pay simple interest at the rate of 0.5% for every month or part of a month for the period on the amount determined in accordance with the following formula:––
(A-B)+(C-D)
where —
- A = the aggregate amount of money seized under section 247 or requisitioned under section 248;
- B = the amount of money, if any, released under sub-section (2);
- C = the proceeds, if any, of the assets sold towards the discharge of the liability under sub-section (1); and
- D = the aggregate amount required to meet the liabilities referred to in sub-section (1).
Section 250(9) of Income Tax Act 2025
250(9) The interest referred to in sub-section (8) shall run from the date immediately following the expiry of one hundred and twenty days from the date on which the last of the authorisations for the search under section 247 or requisition under section 248, was executed to the date of completion of the assessment or reassessment or recomputation.
FAQs on Section 250 of Income Tax Act 2025
What is the primary purpose of Section 250 of the Income Tax Act, 2025?
Section 250 governs how assets seized under Section 247 or requisitioned under Section 248 are applied to recover tax liabilities, penalties, and interest, and the procedure for their release.
What liabilities can be recovered from the seized or requisitioned assets under Section 250(1)?
The Assessing Officer can recover the aggregate of existing liabilities, liabilities determined up to the date of assessment completion, liabilities determined after assessment completion till asset release, and liabilities arising from applications before the Interim Board of Settlement.
Can assets be released before the completion of assessment?
Yes, under Section 250(2), a person may apply within 30 days from the end of the month of seizure for the release of assets after satisfying the Assessing Officer about the nature and source, recovery of existing liabilities, and obtaining prior approval from a senior tax authority.
What is the deadline for releasing assets under Section 250(3)?
Assets must be released within 120 days from the date the last search or requisition authorisation was executed.
How is seized money applied to liabilities?
Under Section 250(4), if the seized asset is wholly or partly in the form of money, it may be directly applied towards tax liabilities, and the assessee will be discharged to that extent.
Can non-monetary assets be used for recovery?
Yes, as per Section 250(5), non-monetary assets may also be used for recovery. They are treated as under distraint and recovered through prescribed procedures.
Does the use of seized assets for recovery prevent the use of other recovery methods?
No, Section 250(6) clarifies that this mode does not restrict other recovery methods available under the Act.
What happens to the remaining assets or proceeds after recovery?
As per Section 250(7), any remaining assets or sale proceeds must be promptly returned or paid to the concerned person.
Is interest paid on excess seized money or proceeds?
Yes, Section 250(8) provides that simple interest at 0.5% per month is payable on the excess amount calculated using the specified formula.
From when is the interest under Section 250(8) calculated?
According to Section 250(9), interest is calculated from the day after the expiry of 120 days from the last search/requisition authorisation execution until the assessment, reassessment, or recomputation is completed.
What is the formula for computing the interest amount under Section 250(8)?
The formula is: (A – B) + (C – D), where A is the seized/requisitioned money, B is any amount released, C is the proceeds from asset sales for liability discharge, and D is the total liabilities recovered.
Who approves the release of seized assets?
The release must be approved by the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, or Commissioner as per Section 250(2)(c).
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