Section 536 of the Income-tax Act, 2025 — Repeal of the 1961 Act and Transitional Savings

In plain language

What Section 536 actually does

Section 536 of the Income-tax Act, 2025 is the "Repeal and savings" clause. It is the legal bridge that switches off the old Income-tax Act, 1961 and switches on the new 2025 Act, while making sure nothing already done under the old law suddenly becomes invalid. It is the 2025 Act's equivalent of Section 297 of the Income-tax Act, 1961.

• Sub-section (1) — plainly repeals the Income-tax Act, 1961 (Act 43 of 1961) with effect from 1 April 2026 (the date the 2025 Act comes into force).
• Sub-section (2) — the heart of the section. It contains 22 detailed clauses ("savings") that keep the old Act alive for pre-transition matters.
• Sub-section (3) — a terminology bridge: references to a "tax year" for periods on or before 1 April 2025 are read as the old "previous year".
• Sub-section (4) — a safety net: wherever Section 536 is silent, Section 6 of the General Clauses Act, 1897 governs the effect of the repeal.

Why a savings clause is needed

When one Act repeals another, in theory everything done under the old law could collapse. That would be chaos — pending assessments, appeals, refunds, carried-forward losses and existing PAN/TAN registrations would all be in doubt. Section 536 prevents this. In simple words: the old law does not disappear for old years — it continues to govern them.

Who it applies to

• Every taxpayer — individuals, HUFs, firms, LLPs, companies, trusts — with any pending matter relating to assessment year 2025-26 or earlier.
• Anyone with a brought-forward loss, unabsorbed depreciation, MAT/AMT credit (old sections 115JAA/115JD) or pending refund from the old regime.
• People in the middle of appeals, revisions, rectifications, reassessments, penalty or search proceedings started under the 1961 Act.

Key conditions and what is saved

• Pending & pre-2026 proceedings: Any proceeding pending on 1 April 2026, and any proceeding initiated on or after that date for a tax year beginning before 1 April 2026, is carried out under the old 1961 Act procedure — this covers notices, assessment, reassessment, recomputation, rectification, penalty, reference, revision and appeals.
• Existing rights & liabilities: Rights, privileges, obligations and liabilities already acquired or incurred stay intact. A tax demand raised under the old Act remains recoverable.
• Registrations & approvals: Existing PAN, TAN, and registrations/approvals granted under the old Act continue as valid, provided they are consistent with the new Act.
• Losses & credits carried forward: Brought-forward business losses, capital losses (subject to the existing 8-year limit) and tax credits carry forward and are set off under the corresponding provisions of the new Act.
• Closed periods stay closed: If a limitation period had already expired under the old Act, the repeal does not revive it.

How it interacts with other provisions

Section 536 is a machinery/transitional provision — it does not impose tax by itself. It works alongside the substantive charging and computation sections of the 2025 Act. For old years it points back to the 1961 Act; for new years (from 1 April 2026) the 2025 Act applies fully. Sub-section (4) makes the General Clauses Act, 1897 the ultimate backstop for anything not expressly saved.

Practical implications for taxpayers

• You do not need to re-do anything for old years — old assessments, appeals and losses simply continue.
• A notice you receive in FY 2026-27 for AY 2024-25 will still quote and follow the old 1961 Act sections, which is correct, not an error.
• Carried-forward losses and MAT/AMT credit from earlier years are protected — keep the old returns and computations safe.
• Interest and refund rules for periods after commencement follow the new Act's provisions.