Form 98 Filing Procedure CBDT Rule 160 2026 Update

What Happened?

The Central Board of Direct Taxes (CBDT) has issued Notification No. 3 of 2026, which prescribes comprehensive procedures for Form 98 filing, registration, correction, deletion, security deposit management, and archival under Rule 160 of the Income Tax Act 2025. This notification sets out detailed guidelines that all relevant taxpayers and tax practitioners must follow for compliance in Assessment Year 2026-27 and onwards.

Background & Legal Context

Rule 160 of the Income Tax Act 2025 deals with securities and deposits provided by taxpayers to the Income Tax Department. Form 98 is the prescribed format for filing information related to such securities, guarantees, and deposits.

Key Legal Framework:

• Income Tax Act 2025: Rule 160 governs the security deposit procedures and requirements. Unlike the old Income Tax Act 1961, the 2025 Act has modernized these procedures with digital filing and automated archival systems.
• CBDT Notification No. 3 of 2026: Provides binding procedural rules for implementation of Rule 160, making it mandatory for all taxpayers and Assessing Officers (AOs) to follow these guidelines.
• Effective Date: The notification comes into effect immediately from the date of issuance (17 September 2026) for all new filings and ongoing matters.

Securities under Rule 160 typically include bank guarantees, fixed deposit receipts, bonds, and other security instruments deposited with the Income Tax Department to secure various tax liabilities, pending assessments, or appeals.

What Does This Mean for You?

For Individual Taxpayers and Business Owners:

If you have deposited any security with the Income Tax Department—whether for securing payment of tax demand, pending appeal, or any other reason—you must now comply with the new Form 98 filing procedure. The CBDT notification makes it mandatory to:

• Register Your Security: File Form 98 within 30 days of depositing any security. This creates an official record in the department's digital system.
• Provide Correct Details: Form 98 must contain accurate information about the nature of security (bank guarantee, FDR, bond), amount, deposit date, purpose, and validity period. Any discrepancy can lead to rejection of your filing.
• Update Changes Promptly: If your security details change—such as extension of guarantee validity, increase or decrease in amount, or change in bank—you must file a corrected Form 98 within 15 days.
• Deletion Request Process: When your security is no longer required (e.g., after assessment is finalized or appeal is disposed), you can request deletion through Form 98. The AO has 45 days to process your deletion request.

For Tax Professionals and Chartered Accountants:

As a CA or tax consultant, you play a crucial role in ensuring client compliance. The new procedure requires:

• Maintaining a centralized register of all client securities and deposits filed under Form 98.
• Setting calendar reminders for renewal dates to avoid automatic rejection or security lapse.
• Ensuring corrections are filed within the 15-day window to maintain accuracy in department records.
• Preparing deletion applications with supporting documentation (assessment completion certificate, appeal disposal order, etc.).

For Assessing Officers:

The AOs must now:

• Process Form 98 filings within specified timelines (30 days for acceptance, 45 days for deletion).
• Maintain digital archival of all Form 98 records for at least 7 years.
• Issue automated acknowledgments to taxpayers confirming receipt and status of Form 98 filings.

Practical Impact on Assessment Year 2026-27:

Many taxpayers currently have pending assessments with securities deposited under the old 1961 Act regime. These securities will now require Form 98 registration for the 2025 Act framework. Failure to do so may result in:

• Your security not being recognized by the department during appeal proceedings.
• Delay in refund of security amount after assessment completion.
• Technical objections raised during assessment on non-compliance grounds.

What Should You Do Now?

Immediate Action Items (Within Next 30 Days):

1. Audit Existing Securities: Prepare a complete list of all securities deposited with the Income Tax Department—include amount, deposit date, nature (bank guarantee/FDR/bond), purpose, and validity period.
2. File Form 98 for All Current Securities: If you have any active security that was deposited before this notification (17 September 2026), file Form 98 within 30 days of this date to register it under the new procedure.
3. Gather Supporting Documentation: Collect bank guarantee certificates, FDR receipts, bond papers, deposit confirmations from the department, and assessment/appeal related orders.
4. Digital Filing Setup: Register on the Income Tax e-filing portal (if not already done). Form 98 can only be filed digitally—paper submissions are not accepted under the new notification.
5. Engage Your CA or Tax Professional: If managing multiple securities or complex situations, let a Chartered Accountant handle Form 98 filing to avoid procedural errors.

Ongoing Compliance (Going Forward):

• File Form 98 within 30 days of depositing any new security.
• File corrected Form 98 within 15 days of any change in security details.
• Apply for deletion as soon as security is no longer required—don't wait for the department to reject it automatically.
• Maintain a personal record of all Form 98 filings with acknowledgment numbers and dates.
• Review security validity dates quarterly to avoid lapses.

Key Takeaways

• CBDT Notification No. 3/2026 is now effective (17 Sept 2026) and mandates Form 98 filing for all securities under Rule 160 of Income Tax Act 2025.
• Registration of existing securities is compulsory within 30 days—taxpayers with old securities must comply immediately to avoid department penalties.
• Digital filing is mandatory—Form 98 must be submitted through the e-filing portal only; paper filings will not be accepted.
• Strict timelines apply: 30 days for initial filing, 15 days for corrections, 45 days for department processing of deletion requests.
• Non-compliance risks: Securities may not be recognized, refunds can be delayed, and technical objections may be raised during assessment if Form 98 is not properly filed.

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