Rule 199 of the Income-tax Rules, 2026

Where this rule sits

Rule 199 gives effect to Section 379 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.

← Rule 198  ·  Rule 200 →

What this rule does

Rule 199 defines three expressions for rules 196 to 198, which run the dispute resolution machinery under section 379.

Clause (a) defines "specified order" in relation to a dispute under section 379 as any of five things: a draft order referred to in section 275(1); an intimation under section 270(1) or section 399(1) where the assessee, deductor or collector objects to the adjustments made in it; an order of assessment or reassessment, except one passed in pursuance of directions of the Dispute Resolution Panel; an order under section 287 having the effect of enhancing the assessment or reducing the loss; and an order made under section 398 which satisfies three cumulative conditions — the aggregate sum of variations proposed or made in the order does not exceed ten lakh rupees, the variation meaning the amount on which tax has not been deducted or collected; the return has been furnished for the tax year relevant to the order and the total income shown in it does not exceed fifty lakh rupees; and the order is not based on a search initiated under section 247 or a requisition made under section 248 in the case of the assessee or any other person, on a survey carried out under section 253, or on information received under an agreement referred to in section 159.

Clause (b) defines the "specified conditions" in relation to an applicant under section 379 by a series of exclusions. The applicant must not be a person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, in the four situations set out — where the detention order, not attracting section 9 or 12A of that Act, has been revoked on or before the Advisory Board's report; where a detention order attracting section 9 has not been revoked before the expiry of the time for, or on the basis of, the review under section 9(3) or the Advisory Board's report; where a detention order attracting section 12A has not been revoked before the expiry of the time for, or on the basis of, the first review or the Advisory Board's report; or where such an order has not been set aside by a court of competent jurisdiction. He must not be a person against whom prosecution has been instituted under the Bharatiya Nyaya Sanhita, 2023, the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prohibition of Benami Transactions Act, 1988, the Prevention of Corruption Act, 1988 or the Prevention of Money-laundering Act, 2002, and who has been convicted under any of those Acts. He must not be a person against whom an income-tax authority has initiated prosecution for an offence under the Act or the Bharatiya Nyaya Sanhita, 2023, or for enforcement of a civil liability, or who has been convicted on such a prosecution. He must not be a person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. And he must not be a person against whom proceedings under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 have been initiated for the tax year for which resolution of the dispute is sought.

Clause (c) then completes the circle: a "specified person" for the purposes of section 379 is a person who fulfils the specified conditions.

Why it is there

Section 379 offers a lighter route out of a dispute, and a route of that kind has to be fenced on two sides — the kind of order that may be taken into it, and the kind of person who may take it there. The rule draws both fences once, so rules 196 to 198 can operate on settled terms. The monetary conditions in clause (a)(v) keep the small deduction default within reach of the scheme, and the exclusions in clause (b) keep it away from applicants with detention, prosecution or black money proceedings against them.

Who it applies to

• An assessee, deductor or collector seeking resolution of a dispute under section 379
• A person testing whether the order against him is a specified order
• The authority applying rules 196 to 198, which take these terms from this rule

The figures, and what each one turns on

What this means in practice

The two monetary limits in clause (a)(v) apply only to an order under section 398 — the other four kinds of specified order in clause (a) carry no monetary condition at all, so a reader who imports the ten lakh and fifty lakh figures into an assessment order or a draft order under section 275(1) is reading a limit that is not there. Within clause (a)(v) the three conditions are cumulative: the variation limit, the returned income limit, and the absence of any search, requisition, survey or exchange-of-information origin. Clause (a)(ii) is conditional in a different way — an intimation under section 270(1) or 399(1) qualifies only where the assessee, deductor or collector objects to the adjustments made in it. Clause (a)(iii) excludes an assessment or reassessment order passed in pursuance of Dispute Resolution Panel directions, so a taxpayer who has already been through that panel cannot bring the resulting order here. On the person side, note that clause (b)(B) and (C) are framed as prosecution and conviction together, while a detention order under clause (b)(A) and a Black Money proceeding under clause (b)(E) exclude on their own terms, and the Black Money exclusion is year-specific — it bites for the tax year for which resolution is sought.

An example

A deductor receives an order under section 398 raising a demand on payments of Rs 8,00,000 on which tax was not deducted. He has filed his return for the relevant tax year showing total income of Rs 46,00,000, and the order arose from a routine processing rather than from a search, requisition, survey or information under an agreement referred to in section 159. All three conditions in clause (a)(v) are met, so the order is a specified order. If the variations had been Rs 12,00,000, or the returned income Rs 55,00,000, or the order had followed a survey under section 253, the order would fall outside clause (a)(v) and rules 196 to 198 would have nothing to work on.

Where you meet this rule

A reader meets it at the threshold of a section 379 application, where the first two questions are whether the order in hand is a specified order and whether the applicant fulfils the specified conditions.

The words themselves

What people get wrong

• Applying the ten lakh and fifty lakh rupee limits to every specified order. They are conditions of clause (a)(v) alone, which deals with an order made under section 398.
• Treating any intimation as a specified order. Clause (a)(ii) requires the assessee, deductor or collector to object to the adjustments made in the intimation under section 270(1) or section 399(1).
• Bringing in an order passed on Dispute Resolution Panel directions. Clause (a)(iii) expressly excepts it from orders of assessment or reassessment.
• Overlooking the origin test in clause (a)(v)(C). An order based on a search under section 247, a requisition under section 248, a survey under section 253 or information received under an agreement referred to in section 159 is outside clause (a)(v), whatever the amounts.
• Reading a pending prosecution alone as disqualifying under clause (b)(B). That limb is framed as prosecution instituted under the listed Acts together with a conviction under any of them.
• Treating a Black Money proceeding as a permanent bar. Clause (b)(E) is tied to the tax year for which resolution of the dispute is sought.

Read with

• Rule 196
• Rule 197
• Rule 198