Section 500
Section 500: provisional attachment of property to protect revenue
Section 500 gives the Assessing Officer a tool to protect the government's revenue while an assessment, reassessment, or a large penalty proceeding is pending - by provisionally attaching the assessee's property. The attachment is time-limited, needs senior approval, and can be lifted if the assessee furnishes a bank guarantee.
When provisional attachment can be ordered
During the pendency of a proceeding for (a) assessment of income, or assessment/reassessment of income that has escaped assessment, or (b) imposition of a penalty under section 444 where the amount or aggregate amount of penalty likely to be imposed exceeds ₹2 crore, the Assessing Officer - if of the opinion it is necessary to protect the interests of revenue - may, with the previous approval of the Competent Authority, by order in writing, provisionally attach any property belonging to the assessee, in the manner prescribed in section 413.
How long the attachment lasts
A provisional attachment ceases to have effect after six months from the date of the order, unless extended.
The Competent Authority may, for reasons recorded in writing, extend this period, but the total extension cannot exceed two years, or sixty days after the date of the assessment or reassessment order, whichever is later.
Release against a bank guarantee
Where the assessee furnishes a guarantee from a scheduled bank for an amount not less than the fair market value of the attached property, the Assessing Officer must revoke the attachment by an order in writing.
If the Assessing Officer is satisfied that a lower-value guarantee is sufficient to protect revenue, they may accept it and revoke the attachment on that basis.
Valuation and timelines for revoking attachment
The Assessing Officer may refer the property to a Valuation Officer to determine its fair market value under section 269(3) to (7); the Valuation Officer must submit an estimate within thirty days of receiving the reference.
An order revoking the attachment must be made within forty-five days of receiving the guarantee where a valuation reference was made, or within fifteen days of receiving the guarantee in any other case.
Invoking the guarantee
Where a notice of demand is served on the assessee and they fail to pay within the specified time, the Assessing Officer may invoke the guarantee, wholly or in part, to recover the amount.
The Assessing Officer must, in the interests of revenue, invoke the bank guarantee if the assessee fails to renew it, or fails to furnish a fresh guarantee for an equal amount, before fifteen days of its expiry.
The amount realised by invoking the guarantee is adjusted against the assessee's existing demand, with any balance deposited in the Personal Deposit Account of the Principal Commissioner or Commissioner at a Reserve Bank of India or State Bank of India branch, or a bank appointed as the Reserve Bank's agent under section 45(1) of the Reserve Bank of India Act, 1934.
Where the Assessing Officer is satisfied the guarantee is no longer needed to protect revenue, it must be released forthwith.
"Competent Authority"
For this section, "Competent Authority" means the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General, or Principal Director or Director.
Frequently asked questions
How long does a provisional attachment under Section 500 last?
It ceases to have effect after six months from the date of the order, though the Competent Authority can extend it for reasons recorded in writing - up to a total of two years, or sixty days after the assessment/reassessment order, whichever is later.
Can I get my property released from provisional attachment?
Yes - if you furnish a bank guarantee from a scheduled bank for an amount not less than the fair market value of the property (or a lower amount the Assessing Officer accepts as sufficient), the Assessing Officer must revoke the attachment.
At what penalty threshold does Section 500 allow provisional attachment?
For a pending penalty proceeding under section 444, provisional attachment is available where the amount or aggregate amount of penalty likely to be imposed exceeds ₹2 crore.
Who has to approve a provisional attachment order?
The Assessing Officer needs the previous approval of the Competent Authority - the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General, or Principal Director or Director.
Related sections
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Talk to our tax team about a provisional attachmentLast updated 9 September 2026