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Two laws, one calendar — here's exactly which Act governs your filing, and what happens to matters already in progress.
With two Acts technically relevant during this changeover, the most common source of confusion is a simple question: which law actually applies to me, right now? The answer depends entirely on dates — and the new Act's own transition clause spells this out clearly.
April 1, 2026 — this is when the Income Tax Act, 2025 came into legal force, and when the Income Tax Act, 1961 was formally repealed. Everything else in this lesson works backward or forward from this single date.
Section 536 of the new Act is the provision that governs the entire transition — it has 22 sub-clauses ensuring that rights, obligations, and liabilities that arose under the old Act before April 1, 2026 continue to be honored, even though the old Act itself is repealed.
In practice, this means the repeal doesn't create a legal vacuum for anything that happened before the cutover — pending matters simply continue under the rules they started under.
A common misconception is that there's a gap year somewhere in the switch. There isn't: income earned up to March 31, 2026 is taxed entirely under the old Act (as FY 2025-26 / AY 2026-27); income earned from April 1, 2026 onward is taxed under the new Act (as Tax Year 2026-27). The two systems meet exactly at the same date with no overlap and no gap.
| Period | Governing Act | Terminology Used |
|---|---|---|
| Income earned up to March 31, 2026 | Income Tax Act, 1961 | FY 2025-26 / AY 2026-27 |
| Income earned from April 1, 2026 onward | Income Tax Act, 2025 | Tax Year 2026-27 |
Assessments, appeals, reassessments, and penalty proceedings that were already pending as of April 1, 2026 continue to be governed and completed under the old 1961 Act — they don't restart or switch frameworks midway. The determining factor for which Act applies to an appeal is generally the provision under which the original order being appealed against was passed.
PAN, TAN & existing approvals: All PANs, TANs, registrations, and approvals granted under the old Act remain valid — no re-registration needed.
Losses and carry-forwards: Unabsorbed losses, depreciation, and tax credits carry forward identically under the new Act; the provisions were renumbered, not substantively changed.
Self-employed professionals, businesses, and NRIs with income falling in both FY 2025-26 and Tax Year 2026-27 need to manage compliance under both Acts simultaneously — this typically means filing separate returns for each period within their respective due dates, rather than trying to combine them into one filing.
| Date | Event |
|---|---|
| August 21, 2025 | Income Tax Act, 2025 receives presidential assent, published in the Official Gazette |
| March 2026 | CBDT releases detailed FAQs on the transition, covering 10 thematic areas |
| April 1, 2026 | New Act comes into force; 1961 Act formally repealed; Tax Year 2026-27 begins |
| July 31, 2026 | Due date for filing FY 2025-26 returns — still entirely under the old 1961 Act |
1. Assuming a pending appeal automatically shifts to new Act rules. Pending assessments and appeals continue under the framework they started under (usually the 1961 Act), regardless of when the final order is passed.
2. Missing that dual-period income needs two separate filings. If you earned income in both FY 2025-26 and Tax Year 2026-27, both returns need to be filed separately under their respective Acts and due dates — not combined into one.
Key Takeaway: April 1, 2026 is the single dividing line — income earned before it falls under the old 1961 Act, income earned after falls under the new 2025 Act, with no gap or overlap. Section 536 protects pending matters from being disrupted by the repeal. Want to know how the actual filing process changed? See New ITR Filing Process.
The old 1961 Act — the Act that applies is determined by when the income was earned, not when the return happens to be filed.
It needs to be examined case-by-case — whether the 1961 Act or 2025 Act provisions apply depends on the specific assessment year and proceeding involved, which is why professional guidance matters for notices spanning the transition.
No — all existing PANs, TANs, and registrations granted under the old Act remain valid without any action needed.
No — CBDT has explicitly confirmed there's no "missing year." April 1, 2026 is a clean dividing line with the old Act covering everything before it and the new Act covering everything from it onward.
Disclaimer: This article is for general educational purposes only and does not constitute personalized financial, investment, tax, or legal advice. Figures, rates, and rules mentioned may change over time — verify current details with an official source or a qualified professional before making financial decisions.