Sections 250 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 250 and 251 say what happens after a search or a requisition. Section 250 lets tax dues be recovered out of the seized or requisitioned assets, provides for release on application within fixed periods, and requires the Central Government to pay interest on money held for long. Section 251 deals with handing over to the right officer, taking copies, the period for which books can be retained and objections. This article explains both as per the Income-tax Act, 2025 as amended by the Finance Act, 2026.
Assets seized under section 247 or requisitioned under section 248 may be applied to liabilities: existing dues, dues determined in the assessment, and the liability arising on a settlement application. The person may apply for release within thirty days from the end of the month of seizure, and release is due within one hundred and twenty days of the last authorisation. Money held beyond that period earns simple interest at 0.5% for every month or part of a month. Books can be copied, and retention is limited by section 251.
By section 1(3), the Act is in force from 1 April 2026, save as otherwise provided. No Finance Act, 2026 amendment is named for these sections. Later amendments, rules and notifications should be checked. For help with a search or seizure matter, see our legal dispute resolution service.
Section 250: application of seized or requisitioned assets
Which liabilities: sub-section (1)
The amount of the following may be recovered out of the assets seized under section 247 or requisitioned under section 248:
| Clause | Liability |
|---|---|
| (a) | Any existing liability (other than advance tax payable under Part C of Chapter XIX) under this Act, the Income-tax Act, 1961 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, in respect of which the person is in default or deemed to be in default |
| (b) | The liability determined on completion of assessment, reassessment or recomputation and the assessment of the year relevant to the tax year in which the search is initiated or requisition is made, or the liability determined on completion of the assessment under Part B of Chapter XVI for the block period (including any penalty or interest in connection with it), in respect of which the person is in default or deemed to be in default |
| (c) | The liability arising on an application made before the Interim Boards for Settlement under section 245C(1) of the Income-tax Act, 1961 |
The other two laws named here are separate enactments; the reader should check them.
Release on application: sub-sections (2) and (3)
The Assessing Officer may release the assets seized as referred to in sub-section (1), or a portion, to the person from whose custody they were seized, on his application made within thirty days from the end of the month in which the asset was seized, on three requirements:
- (a) the Assessing Officer is satisfied on the explanation furnished that the nature and source of acquisition of the assets is explained;
- (b) any existing liability in sub-section (1) is recovered out of the assets; and
- (c) prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is obtained.
The assets so released 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.
Money and other assets: sub-sections (4) to (7)
- (4) If the assets consist solely of money, or partly of money, the Assessing Officer may apply the money to the liabilities, and the assessee is discharged of the liability to the extent applied.
- (5) Assets other than money may also be applied for any liability left undischarged, and are deemed to be under distraint as if effected by the Assessing Officer or Tax Recovery Officer under authorisation from the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner under section 416(7). Recovery out of such assets is effected in the manner prescribed, which is left to the Income-tax Rules, 2026.
- (6) The mode of recovery under sub-section (1) does not preclude recovery by any other mode laid down in the Act.
- (7) Any assets or proceeds remaining after the liabilities are discharged shall be forthwith made over or paid to the person from whose custody they were seized.
Interest: sub-sections (8) and (9)
The Central Government shall pay simple interest at the rate of 0.5% for every month or part of a month, for the period in sub-section (9), on the amount determined by the formula as printed:
(A – B) + (C – D)
| Letter | Meaning |
|---|---|
| A | Aggregate amount of money seized under section 247 or requisitioned under section 248 |
| B | Amount of money, if any, released under sub-section (2) |
| C | Proceeds, if any, of the assets sold towards the discharge of the liability under sub-section (1) |
| D | Aggregate amount required to meet the liabilities referred to in sub-section (1) |
The period runs from the day immediately following the expiry of one hundred and twenty days from the date on which the last of the authorisations for the search or requisition was executed, to the date of completion of the assessment, reassessment or recomputation.
Section 251: copying, extraction, retention and release
Handing over: sub-section (1)
Where the authorised officer in section 247(1) has no jurisdiction over the person in section 247(1)(a) or (b), the assets and material seized or requisitioned under section 247(1) to (4) are handed over to the Assessing Officer having jurisdiction within one hundred and eighty days from the date on which the search is initiated or the requisition is made. That Assessing Officer then exercises the powers in sub-sections (2) and (3).
Copies and extracts: sub-section (2)
On an application made by the person from whose custody the material was seized or requisitioned, the authorised officer shall allow him to make copies or take extracts, in the presence of that officer or another person empowered by him, at the place and time appointed by the officer.
Retention: sub-sections (3) and (4)
| Rule | Detail |
|---|---|
| Ordinary period (sub-section (3)(a)) | Up to one month from the end of the quarter in which the assessment, reassessment or recomputation order is made under section 270(10), section 271, section 279 or section 294(1)(c) |
| Longer retention (sub-section (3)(b)) | Beyond that period, after recording reasons in writing and obtaining approval from the approving authority |
| Outer limit (sub-section (4)) | The approving authority shall not allow retention beyond thirty days from the date on which all proceedings under this Act or the Income-tax Act, 1961 for the years to which the material is relevant are completed |
Objection: sub-section (5)
A person legally entitled to the assets and material who objects, for any reason, to the approval under sub-section (3)(b) may apply to the Board, stating the reasons and asking for the return. The Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit.
Several of the assessment sections named in sub-section (3)(a) are explained in our posts, for example section 270, processing and assessment and section 279, income escaping assessment.
A worked example
Names and amounts are assumed; the 0.5% rate and the formula are as printed.
Cash of Rs. 50,00,000 is seized from Mr. Kabir Anand under section 247. He applies for release within thirty days from the end of the month of seizure and, after he explains the nature and source, the Assessing Officer, with prior approval, releases Rs. 10,00,000. An asset other than money is sold, and the proceeds are Rs. 5,00,000. The aggregate amount required to meet the liabilities under sub-section (1) is Rs. 30,00,000.
- A = 50,00,000; B = 10,00,000; C = 5,00,000; D = 30,00,000
- (A - B) + (C - D) = (50,00,000 - 10,00,000) + (5,00,000 - 30,00,000) = 40,00,000 - 25,00,000 = Rs. 15,00,000
- Interest is payable for the period in sub-section (9), which starts the day after one hundred and twenty days from the last authorisation and ends on completion of the assessment. If that period is, say, 3 months or part of a month (assumed), interest = 15,00,000 x 0.5% x 3 = Rs. 22,500.
Need help after a search?
The release application, the explanation of source and the objection to retention each have short time limits. Our team can help review the position through our legal dispute resolution service.
Key takeaways
- Seized or requisitioned assets can be applied to existing dues, dues on completion of assessment and settlement liabilities.
- Release is possible on an application within thirty days from the end of the month of seizure, with source explained and prior approval.
- Released assets are due within one hundred and twenty days from the last authorisation.
- Interest is 0.5% for every month or part of a month on money held beyond the period.
- Books may be copied; retention beyond one month from the end of the quarter needs written reasons and approval; objection lies to the Board.
Read next
- Sections 248 and 249: powers to requisition and reasons not to be disclosed
- Sections 252 and 254: power to call for information and to collect information
- Section 247: search and seizure
- Chapter XIV: tax administration
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.