Transition provisions under Section 536 of the Income-tax Act, 2025 practical summary for tax professionals

CBDT clarifies transition provisions under Section 536 of the Income-tax Act, 2025

CBDT has issued important FAQs on how pending proceedings, summons, notices, search matters, recovery actions, prosecution matters and pending applications will be handled during the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025.

Key takeaways:

1. Summons treated as notices

CBDT has clarified that summons issued under the Act are to be considered notices for the purpose of Section 536 transition provisions.

2. Pre-01.04.2026 matters

Where proceedings relate to a period before 01 April 2026, provisions of the Income-tax Act, 1961 may continue to apply through the savings provisions.

3. Tax Year 2026-27 onwards

Matters relating to the period on or after 01 April 2026 will generally be governed by the Income-tax Act, 2025.

4. Search and requisition cases

CBDT has clarified how search / requisition cases initiated before or after 01 April 2026 will be dealt with, including post-search enquiries.

5. Recovery, penalty and directors’ liability

The applicable law will depend on the period to which the demand, default or liability relates.

6. 12AB/80G approvals

Existing registrations and approvals granted under the Income-tax Act, 1961 remain valid and protected under the transition provisions.

7. Pending applications

Pending 12AB/80G and LDC / NDC applications will be processed based on the filing date, pending status and period for which approval / certificate is sought.

Professional observation:

The applicable law should not be decided merely by the date of notice or action. Practitioners must examine the relevant period, nature of proceeding, pending status as on 01.04.2026 and the specific savings clause under Section 536.

This clarification is significant for taxpayers, companies, directors, trusts, NGOs, deductors and tax professionals dealing with pending income-tax matters.

By Mahesh Chandra & Associates

Chartered Accountants

http://www.maheshchandra.in

mca@mca.net.in

CBDT FAQ Memorandum

Transition provisions under Section 536 of the Income-tax Act, 2025 practical summary for tax professionals.

Office Memorandum

F. No. 370149/107/2026-TPL

Dated: 06 July 2026 | CBDT – TPL Division

What this memorandum clarifies

How pending and new proceedings/applications are to be treated after the Income-tax Act, 2025 comes into force from 01.04.2026, particularly where the repealed Income-tax Act, 1961 continues to apply under section 536.

Pending matters

Proceedings relating to periods before 01.04.2026 may continue under the 1961 Act through the savings provisions.

New Act matters

Matters for tax year 2026-27 onwards are generally to be handled under the Income-tax Act, 2025.

Application handling

Pending 12AB/80G and LDC/NDC applications receive specific transition treatment.

Practitioner’s takeaway

Do not decide merely by the date of notice. Check the relevant period, the nature of proceeding, and whether the proceeding/application was pending on 01.04.2026.

A. Summons & Notices

FAQs 1 to 5 when summons/notices remain under the 1961 Act and when the 2025 Act applies.

Core rule

A summons is treated as a notice. Issuance of summons results in a proceeding for the purpose of section 536(2)(c) of the Income-tax Act, 2025.

Proceedings relating only to pre-01.04.2026 period

For STR, TEP, CRS, FATCA or assessment matters relating only to a period prior to 01.04.2026, summons may be issued using section 131 of the Income-tax Act, 1961, read with section 536(2) (c) of the Income-tax Act, 2025.

Proceedings not clearly assignable to a period

Where TEP/STR does not specifically relate to a pre-01.04.2026 period and no specific period can be assigned, summons may be issued under section 246 of the Income-tax Act, 2025.

Assessment for period on/after 01.04.2026

For assessments pertaining to tax year 2026-27 onwards, powers under section 246 of the Income-tax Act, 2025 are to be used for summons.

Important distinction

Section 131(1A) / section 131 of the 1961 Act and section 246(2) of the 2025 Act are treated as proceedings within the meaning of section 536(2) (c), where applicable.

Practitioner’s takeaway

Decision point: identify the period to which the enquiry relates. Pre-01.04.2026 matters can continue under the 1961 Act through the repeals and savings clause.

Search, Information & Jurisdiction

FAQs 6 to 9 post-search enquiries, calling information, PAN migration and transfer of jurisdiction.

Search/requisition before 01.04.2026

For searches initiated under section 132 or requisitions under section 132A before commencement of the 2025 Act, the provisions of the repealed 1961 Act continue for proceedings connected with such search/requisition, including post-search enquiries and assessment.

Search/requisition on or after 01.04.2026

Section 536(2)(v) does not apply. Powers under section 246 of the Income-tax Act, 2025 are to be exercised wherever required.

Power to call for information

For section 133(6) of the 1961 Act and section 252 of the 2025 Act, the same principles applicable to summons are to be followed.

PAN migration / transfer of jurisdiction Notice u/s 127(2) issued before 01.04.2026 Order may be passed u/s 127 of 1961 Act——– Initiated on/after 01.04.2026 Final order u/s 243 of 2025 Act

Transfer of jurisdiction is not tied to a specific assessment year. Once jurisdiction is transferred, all matters go to the new Assessing Officer.

Practitioner’s takeaway

For search and jurisdiction matters, the trigger date of search/requisition or jurisdiction-transfer process is critical.

Attachment, Recovery & Penalties

FAQs 10 to 14 – practical transition treatment for enforcement-linked actions.

Provisional attachment

Pre-01.04.2026 assessment: section 2818 of 1961 Act. Otherwise: section 500 of 2025 Act.

Recovery by TRO

Demand relating to period before 01.04.2026 can be recovered under the 1961 Act via section 536(2) (c) and also under 2025 Act via section 536(2)(i).

Directors’ liability

Irrecoverable demand of private company: liability under section 179 of 1961 Act or section 323 of 2025 Act, based on the period to which demand relates.

Penalty for tax arrears default

Pre-01.04.2026 demand: section 221 of 1961 Act. Demand relating to period on/after 01.04.2026: section 412 of 2025 Act.

Tax Clearance Certificate

Application received before 01.04.2026: section 230 of 1961 Act or section 420 of 2025 Act, depending on applicable period.

Application on/after 01.04.2026: section 420 of 2025 Act.

Practitioner’s takeaway

For enforcement action, link the action to the period of demand/assessment, not merely to the date on which the officer acts.

Prosecution, Retention & Benefit Claims

FAQs 15 to 17 identify the action/default section before deciding the applicable Act.

Prosecution

First ascertain the section under which the default has taken place. The prosecution provision follows the underlying default/action: examples include section 276 of 1961 Act, section 275A of 1961 Act, and section 477 of 2025 Act.

Retention of books of account

Retention depends on the section under which the search/survey/action was initiated. Examples: section 132(8) of 1961 Act for search under section 132; section 251(3) of 2025 Act for search under section 247; section 133A(3)(ia) of 1961 Act or section 253(5)(c) of 2025 Act for survey.

Applications seeking benefits under 1961 Act

Applications filed on/before 31.03.2026 for benefits under sections 10(46), 10(46A), 80E, 80C(2), 80G(2), 11(1)(c) etc. and still pending on 01.04.2026 may be disposed of by applying section 536(2)(c) or section 536(2)(e), as applicable.

Professional checklist

1. Identify the date of default/search/survey/action.
2. Identify the period to which the issue relates.
3. Verify whether the matter was pending on 01.04.2026.
4. Apply the corresponding 1961/2025 Act provision

Practitioner’s takeaway

For legacy applications and proceedings, section 536 operates as the bridge between the repealed 1961 Act and the Income-tax Act, 2025.

12AB/80G and LDC/NDC Applications

FAQs 18 to 23- transition treatment for pending approval and lower/no deduction certificate applications.

12AB/80G filed on/before 31.03.2026, pending on 01.04.2026

Where approval is sought from tax years including 2025-26, proceedings may continue under the 1961 Act by virtue of sections 536(2)(c) and 536(2)(e) of the 2025 Act.

Existing registration / approval

Any registration or approval granted under the Income-tax Act, 1961 remains valid and protected under section 536(2)(j) of the Income-tax Act, 2025.

12AB/80G for Tax Year 2026-27 onwards

Pending applications filed on/before 31.03.2026 and pending on 01.04.2026 may be administratively treated as filed under corresponding provisions of the 2025 Act and processed accordingly.

LDC/NDC disposed by 31.03.2026

Certificates issued for applications filed and disposed of on/before 31.03.2026 are protected under section 536(2)(b) read with section 536(2)(j).

LDC/NDC pending or filed after 01.04.2026

For tax year 2026-27, pending applications filed on/before 31.03.2026 may be processed under corresponding 2025 Act provisions. Applications filed on/after 01.04.2026 will be dealt with entirely under the Income-tax Act, 2025.

Practitioner’s takeaway

For trust/NGO and withholding applications, document the filing date, approval period sought, and pending status as on 01.04.2026.