As of April 1, 2026, the new Income-tax Act, 2025 replaced the Income-tax Act, 1961 for tax years beginning on or after that date. You may be wondering whether your pending income tax notice, appeal, assessment, reassessment, or any other tax-related proceeding will now be handled under the new law or continue under the provisions of the old Income-tax Act.
Here’s what the CBDT’s clarifications mean for taxpayers with ongoing tax matters.
Timelines for responding to notices, filing appeals, or completing assessments will depend on the law applicable to the relevant assessment year and proceeding.
For AY 2026-27 or earlier years, notices, appeals, reassessments and pending proceedings will generally continue to be governed by the Income-tax Act, 1961, including the applicable limitation periods and procedural timelines.
The new Act will not automatically reset, extend or alter timelines for past-year matters. Accordingly, taxpayers should comply with the time limit mentioned in the notice or prescribed under the old law.
For tax years beginning on or after 1 April 2026, the timelines under the new Act would apply. However, taxpayers should continue to respond to notices, file appeals, and comply with other procedural requirements within the timelines specified in the relevant notice or statutory provision.
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The transition from the Income Tax Act, 1961 to the Income Tax Act, 2025 is governed by Section 536 of the Income Tax Act (ITA), 2025, which contains the repeal and savings provisions designed to ensure continuity of tax administration and provide certainty to taxpayers.
These provisions clarify how rights, obligations, proceedings, and actions undertaken under the ITA, 1961 will be treated after the new law comes into force.
To further remove ambiguity and facilitate a smooth transition, the Central Board of Direct Taxes (CBDT) has also issued a detailed set of Frequently Asked Questions (FAQs) explaining the treatment of pending notices, assessments, reassessments, searches, applications, appeals, and other proceedings.
Further, according to the FAQs and Section 536(2)(c) of the ITA 2025, for taxpayers whose scrutiny assessments, appeals or reassessment proceedings are pending, the new Income-tax Act will not automatically replace the old law merely because the new Act has come into force.
The applicable law will depend on the tax year to which the proceedings relate. Where the proceedings pertain to assessment years governed by the Income-tax Act, 1961, such proceedings will continue to be conducted and concluded under the provisions of the 1961 Act.
This means that if a scrutiny notice under Section 143(2), reassessment notice under Sections 147 / 148, appeal, rectification or other proceeding has already been issued before 1 April 2026 for any earlier assessment year, the taxpayer’s case will continue under the old Act.
“The new Act applies prospectively to tax years beginning on or after 1 April 2026, and does not invalidate or override pending proceedings initiated under the old Act. Further, even where reassessment proceedings for an earlier year are initiated after 1 April 2026, they may still be initiated under the old Act, provided the relevant conditions and limitation period prescribed under the Income-tax Act, 1961 are satisfied,” commented CA (Dr.) Suresh Surana.
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As aforementioned, pending appeals before the CIT(A), ITAT, High Courts or Supreme Court will continue under the Income-tax Act, 1961 if they relate to AY 2026-27 or any earlier assessment year. The new Income-tax Act will not automatically apply merely because it has become effective.
“The appellate authorities will decide such matters based on the provisions, procedures, limitation periods and judicial principles applicable under the old law. Therefore, assessments, reassessments, penalties, disallowances or other disputes relating to past years will continue to be governed by the 1961 Act until finally resolved,” said Surana.
The new Act will generally apply prospectively to income from 1 April 2026 onwards, while pending appeals and disputes for earlier years will continue under the old law.
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Considering that the procedural framework under the new law is substantially in line with the existing provisions under the Income-tax Act, 1961, the likelihood of significant procedural disputes arising merely due to the transition appears limited, according to Surana.
While interpretational issues cannot be completely ruled out, the scope for litigation on account of procedural differences alone may be relatively minimal.
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New Income Tax Act: Essential steps for pending cases
The transition provisions under Section 536 of the ITA, 2025 are designed to ensure continuity of proceedings relating to tax years beginning before 1 April 2026. Accordingly, taxpayers with pending matters should focus on maintaining compliance and ensuring that their existing rights and obligations are properly preserved.
Surana says key steps may include:
Verify ongoing proceedings: Taxpayers should review pending assessments, reassessments, appeals, rectification proceedings and other matters to ensure they continue to be tracked under the framework of the ITA, 1961, as clarified in the CBDT FAQs.
Avoid duplication of proceedings: Pending appeals, applications or disputes do not need to be refiled merely because the new Act comes into force. Existing proceedings will continue under the old law.
Monitor notices and timelines: Taxpayers should continue to comply with response deadlines, appeal filing requirements and other procedural timelines prescribed under the ITA, 1961 for matters relating to earlier tax years.
Organise and preserve documentation: Maintain complete records relating to pending proceedings, including notices, submissions, orders, tax payments, TDS credits, appeals and supporting documents, so that continuity can be demonstrated wherever required.
Separate pre- and post-transition records: Taxpayers should clearly separate financial records, tax payments, TDS credits and other compliance data relating to periods before and after 1 April 2026 to facilitate compliance under both legislative frameworks.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws and regimes are subject to frequent changes by the government. Readers should verify details with official Income Tax Department notifications or consult a Chartered Accountant before making any financial decisions.
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