CBDT Transition FAQ Maps Income-Tax Act, 2025, Income-Tax Act, 1961

(INDIA) — India’s tax authorities have set out how the shift from the Income-tax Act, 1961 to the Income-tax Act, 2025 will work, saying the change from 1 April 2026 will depend first on the year involved and then on whether an issue falls under saved old-law rights, ongoing proceedings, or the new compliance framework.

The official CBDT transition FAQ says the Income-tax Act, 1961 stands repealed from 1 April 2026, but earlier years, pending proceedings, continuing rights and saved liabilities remain alive where transition provisions preserve them. It also says the Income-tax Rules, 2026 were notified on 20 March 2026 under section 533 of the 2025 Act and come into force on 1 April 2026.

That means the move is not a simple switch from one law to another. The department’s working approach is to ask which law applies to a particular issue, then check the year, the saving clause and, where needed, the official mapping utility.

Under the master rule laid out in the CBDT transition FAQ, income up to 31 March 2026 is usually governed by the Income-tax Act, 1961. Income from 1 April 2026 onward is usually governed by the Income-tax Act, 2025 read with the Income-tax Rules, 2026.

Proceedings that arise after 1 April 2026 but relate to an earlier year may still continue under the older law. The FAQ says a notice, appeal, revision, reassessment, penalty or search matter for an earlier year can remain under the Income-tax Act, 1961 because of saving and transition provisions.

The distinction matters because the FAQ says there is no missing year and no overlap in the transition. Income of FY 2025–26 remains under the old regime and corresponds to AY 2026–27, while income from 1 April 2026 onward falls under the Income-tax Act, 2025 for the relevant tax year.

Taxpayers therefore cannot decide which law applies only by looking at the date on which they receive a notice, file a form or appear in a proceeding. The FAQ says the correct test is the year involved and the legal source of the issue.

The same guidance says the new law is intended to consolidate, renumber and streamline the old statute rather than create a disconnected tax system. That is why old rights, approvals, elections, declarations and proceedings may continue where the saving clause protects them.

For ordinary taxpayers, the CBDT transition FAQ gives a direct working rule. If an issue concerns income earned up to 31 March 2026, taxpayers should start with the Income-tax Act, 1961.

That remains the starting point even if the return is filed later, or if scrutiny, rectification, revision or appeal happens after 1 April 2026. Earlier-year proceedings can continue under the old Act.

For income from 1 April 2026 onward, taxpayers should start with the Income-tax Act, 2025 and also check the Income-tax Rules, 2026 where forms or reporting are involved. The department’s portal now groups the new Act, the new Rules and transition utilities together, signalling that post-commencement analysis often requires both layers.

A notice received after 1 April 2026 for an earlier year does not automatically bring the case under the new law. The FAQ says fresh or continuing proceedings for pre-2026 tax years can still run under the Income-tax Act, 1961, provided the saving clause and old-law limitation rules allow it.

The same logic applies to continuing deductions, exemptions and earlier options. The FAQ uses the example of deduction continuation for a housing project that validly qualified under old section 80-IBA, subject to the corresponding continuation mechanism in the new law.

It also says an option exercised under the old law survives only where a corresponding provision exists in the new Act. In practice, that means repeal does not itself erase every election or benefit already triggered under the older statute.

For tax officers and professionals, the guidance turns on citation discipline and year-based statute selection. For tax years beginning before 1 April 2026, pending or fresh saved proceedings continue under the Income-tax Act, 1961 as if the new Act had not been enacted.

That affects reassessment, revision, appeal, penalty and other continuing matters. Drafting notices and orders after commencement, the FAQ says, requires selecting the statute by year rather than by the calendar date of action.

In reassessment matters, the FAQ says the provisions for escaped income now sit in sections 279 to 286 of the Income-tax Act, 2025, corresponding to the old reassessment cluster under the 1961 Act. Post-commencement drafting for new-law years should cite the new numbering, while saved old-year matters should continue under the older Act.

Revision rules show a similar pattern of continuity with new drafting. The FAQ says the core standard remains the same: the order must be both erroneous and prejudicial to the interests of the revenue.

It also says the outer limitation remains two years from the end of the financial year in which the order sought to be revised was passed. At the same time, the 2025 framework now expressly provides a 60-day minimum residual period rule.

Search and requisition matters are treated even more clearly. The FAQ says that where a search under section 132 or requisition under section 132A was initiated before commencement, the entire proceeding, including assessment, reassessment, penalty and appeal, continues under the Income-tax Act, 1961.

For non-resident Indians, the FAQ says two questions matter more than one: which law governed the original right, option or exemption, and which law governs the year in which the later event occurs. That approach means an NRI issue may require reading both the old and new frameworks together.

The FAQ gives old section 115F as a central example. Where an NRI claimed exemption under old section 115F and transfers the replacement asset after 1 April 2026 but within the lock-in period, the claw-back liability still arises under the Income-tax Act, 1961 because that was the statute that granted the original exemption.

At the same time, the year of taxability is the tax year in which the transfer occurs. That means the later-year assessment may proceed under the new framework even though the source of the liability lies in the old law.

The FAQ also says an old declaration under section 115H may continue where corresponding continuation conditions are met. It adds that the foreign-currency capital-gains mechanism for non-residents has been retained in the new law under section 72.

That preserves part of the old structure for NRIs even after the new Act begins. The transition, then, is not only about renumbering sections but also about identifying which rights survive and which year governs the taxable event.

Forms and remittance rules add another layer. The FAQ says old Forms 15CA and 15CB correspond to Forms 145 and 146 in the new framework, and forms already submitted for remittances made before 31 March 2026 remain valid.

For remittances after commencement, the new forms apply. This is one of the places where the Income-tax Rules, 2026 can matter more than the Act itself.

The department’s forms guidance says those FAQs are educational resources and that legal interpretation must come from the Income-tax Act, 2025 and the Income-tax Rules, 2026. That makes the rules the primary operational reference for compliance-heavy questions after 1 April 2026.

The FAQ points to several areas where the rules must be checked directly: TDS/TCS, PAN/TAN, audit reports, salary-relief forms, declarations and remittance forms. In these areas, section mapping alone does not settle the compliance answer.

A March-April 2026 TDS straddle illustrates the point. The FAQ says TDS applicability depends on the earlier of credit or payment.

If that earlier event is on or before 31 March 2026, the old law applies. If it is on or after 1 April 2026, section 393 of the 2025 Act applies.

The same shift appears in the form architecture. For PAN applications, the new framework splits old Forms 49A/49AA into Forms 93, 94, 95, and 96, depending on whether the applicant is an Indian individual, Indian non-individual entity, non-citizen individual, or foreign entity.

For TAN applications, old Form 49B has been divided into Form 134 for government applicants and Form 135 for non-government applicants. For no-TDS self-declarations on eligible incomes, old Forms 15G and 15H have effectively been unified as Form 121 under section 393(6) and Rule 211.

Salary-relief filings have also changed. The form for salary arrears, gratuity, retrenchment compensation, or commuted pension relief is now Form 39, replacing old Form 10E in the new compliance architecture.

Tax audit follows the same pattern. The department’s audit FAQ states that Form 26 is now the prescribed audit-report form under section 63 of the 2025 Act and Rule 47 of the 2026 Rules, applicable for tax years beginning on or after 1 April 2026.

The quick-reference position on common transition questions is narrower than the wider legal change. AY 2026–27 generally remains under the Income-tax Act, 1961 because it corresponds to income of FY 2025–26.

Income from 1 April 2026 onward generally falls under the Income-tax Act, 2025, with the 2026 Rules governing forms and compliance. A notice issued in 2027 for an earlier year does not, by itself, shift the case into the new law, because saved proceedings may continue under the old Act.

The CBDT transition FAQ also introduces the new framework’s vocabulary. A tax year becomes the main yearly unit for post-commencement income, replacing the older previous-year and assessment-year structure as part of the simplification effort.

A saved proceeding is one that continues under the old law because repeal does not disturb it. A corresponding provision is the mapped new-law provision identified through the official utility, but the FAQ says that should not be treated as automatically textually identical in every respect.

Taken together, the department’s message is procedural as much as legal. First identify the year. Then decide whether the issue concerns substantive taxability, a saved old-law consequence, or forms and compliance mechanics.

Only after that should taxpayers, officers and advisers decide whether to begin with the Income-tax Act, 1961, the Income-tax Act, 2025, the Income-tax Rules, 2026 or the official mapping utilities. The CBDT transition FAQ makes that sequence the centre of the transition, and for taxpayers, officers and NRIs alike, the immediate task is not memorising new section numbers but knowing which law applies first.