India is moving from the Income Tax Act 1961 to the new Income Tax Act 2025. The move has raised a number of questions among taxpayers, businesses and tax professionals regarding upcoming assessments, procedural issues and ongoing filings.
To address these concerns, the Central Board of Direct Taxes (CBDT) has released a detailed set of frequently asked questions (FAQs) explaining how pending cases and various tax proceedings will be dealt with once the new law comes into force on April 1, 2026.
The Frequently Asked Questions section published in the official memorandum dated 6 July 2026 explains the transitional provisions under Section 536 of the Income Tax Act, 2025.
The guidance covers a wide range of issues including pending assessments, lesser deduction certificates (LDC), no deduction certificates (NDC), search cases, collection proceedings, prosecution, registration and other procedural matters.
Expected tax proceedings will continue under the old law
The CBDT has clarified that all proceedings relating to tax years beginning before 1 April 2026 will continue to be governed by the Income Tax Act, 1961 even after the new law comes into force.
In other words, the Income Tax Act 2025 will not apply to events or tax years prior to April 1, 2026. This means that pending proceedings will continue under the old law until they are completed, providing greater certainty and continuity for taxpayers during the transition period.
This also means that even if certain proceedings are ongoing when the new law comes into force, they will still follow the procedures provided for in the previous law. legislation.
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The CBDT has also clarified that the provisions of the repealed Income Tax Act will continue to apply to trial pending on the commencement date, as well as proceedings commenced after 1 April 2026 if they relate to a tax year commencing before that date. For complete clarity, the details are described below:
Legal aspect/area | What the CBDT explained |
|---|---|
| Expected grades | Proceed as per the Income Tax Act 1961 if applicable to previous tax years. |
| Proceedings initiated after April 1, 2026 for old tax years | Old laws and procedures will continue to apply |
| Applications from LDCs/NDCs are expected to be reviewed on April 1, 2026. | May be considered under the relevant provisions of the Income Tax Act, 2025. |
| New applications from LDCs/SNCs after April 1, 2026 | Will be fully processed as per the Income Tax Act 2025. |
Clarity on applications for certificates with lower TDS
For all applications and applications pending under Section 197 of the Income Tax Act, 1961, which allows taxpayers to claim lower or nil tax deduction at source (TDS), the CBDT has also sought to address this issue to ensure transparency.
In this regard, applications submitted no later than 31 March 2026 that remain pending on 1 April 2026 and for which approval is required for the tax year 2026-27 onwards may be processed administratively in accordance with relevant provisions Income Tax Act 2025.
However, applications for “Lower Deduction Certificates” or “No Deduction Certificates” made from April 1, 2026, will be fully subject to the provisions of the new law, i.e. Income Tax Act, 2025
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This comprehensive CBDT clarification aims to ensure a smooth transition between the two tax regimes and provides much-needed guidance to taxpayers, tax professionals and businesses facing ongoing challenges during the current transition period.