Section 254 of the Income-tax Act, 2025 — Power to Collect Certain Information

In plain language

What Section 254 actually says

Section 254 of the Income-tax Act, 2025 is titled "Power to collect certain information". It gives income-tax authorities a limited, on-the-spot power to walk into a business or professional premises and gather information that may be useful or relevant for the purposes of the Act. It is the successor to Section 133B of the Income-tax Act, 1961, and it carries forward the same framework almost word for word, with only minor drafting refinements. The provision applies from 1 April 2026, the effective date of the new Act.

The key idea is that this is an information-gathering visit, not a search or a raid. It is a soft, verification-type power meant for survey-style data collection — checking that businesses exist where they say they do, that they are recording transactions, and that returns match ground reality.

Who can exercise the power

Under Section 254(4), the "income-tax authority" for this section means:

• A Joint Commissioner, a Joint Director, an Assistant Director, or an Assessing Officer — these officers can act on their own within their jurisdiction.
• An Inspector of Income-tax — but only when he has been specifically authorised by the Assessing Officer to exercise this power over the area (or a portion of it) that falls under that Assessing Officer's jurisdiction. An Inspector cannot walk in on his own initiative.

The officer can only enter premises that are within his own assigned jurisdiction or occupied by a person over whom he has jurisdiction.

What the officer can and cannot do

• Can enter any building or place where a business or profession is carried on — whether or not it is the principal place of business. Branch offices, godowns, secondary premises are all covered.
• Can require the proprietor, an employee, or any other person attending to or helping in that business/profession to furnish such information as may be prescribed (through rules/forms).
• Cannot enter outside business hours — Section 254(2) permits entry only during the hours at which the place is open for the conduct of business or profession.
• Cannot remove anything — Section 254(3) is a strong safeguard: the officer shall on no account remove, or cause to be removed, any books of account, other documents, cash, stock, or other valuable article or thing from the premises.

How it differs from search and survey powers

Section 254 is deliberately the lightest-touch of the department's field powers. It is important to understand where it sits:

• No pending proceeding is needed. Unlike a search, the officer does not need an assessment or investigation to be running. This is a proactive, preventive tool.
• No seizure. Because nothing can be removed, there is no impounding of books or seizure of cash — that distinguishes it sharply from a survey or search.
• Prescribed information only. The officer collects the specific information notified in the rules, not a free-ranging examination of all records.

Practical implications for taxpayers

If an authorised officer visits your shop, office, or clinic under Section 254 during working hours, you are expected to furnish the prescribed information — such as the name of the proprietor, nature of business, and other basic particulars. You are within your rights to:

• Ask to see the officer's identity and confirm the authorisation (especially if the visitor is an Inspector).
• Insist that no books, cash, or stock are physically taken away — the law forbids it.
• Confirm the visit is during your normal business hours.

Refusing to cooperate or furnish prescribed information can attract penal consequences under the Act's penalty provisions, so cooperation combined with awareness of your safeguards is the practical approach. This section is often the department's first, gentle touchpoint before more intrusive powers like faceless information collection (Section 260) or full surveys are considered.