CBDT Issues FAQs on Section 536 Transition Provisions
The Central Board of Direct Taxes (CBDT) has issued 23 frequently asked questions on Section 536 of the Income-tax Act, 2025, the repeal and savings provision that decides which income tax law governs proceedings straddling 1 April 2026. The CBDT FAQs on transition provisions, F. No. 370149/107/2026-TPL, were issued by the Tax Policy and Legislation (TPL) Division. They are written for assessing officers, but chartered accountants, tax advocates and in-house tax teams handling notices, search assessments, recovery, charitable trust registrations and lower TDS certificates will use the same answers when advising clients.
The working rule running through the FAQs is simple. If a proceeding relates to a tax year, assessment year or event before 1 April 2026, the matching power of the Income-tax Act, 1961 continues through the savings clauses in Section 536(2). If it relates to tax year 2026-27 or later, the Income-tax Act, 2025 applies.
Summons and calls for information
- A summons is a notice for the purpose of Section 536(2)(c), and issuing one is a "proceeding" (FAQs 1 and 5).
- For assessments, tax evasion petitions or suspicious transaction reports relating to periods before 1 April 2026, officers can use Section 131 of the 1961 Act through Section 536(2)(c), even for summons issued after that date (FAQ 2).
- For assessments of tax year 2026-27 onwards, summons are issued under Section 246 of the 2025 Act (FAQ 4).
- The same approach applies to calls for information: Section 133(6) of the 1961 Act for the old period and Section 252 of the 2025 Act for the new one (FAQ 8).
Search cases and transfer of jurisdiction
For a search conducted before 1 April 2026, post-search enquiries and assessments may continue with Section 131(1) of the 1961 Act under Section 536(2)(v). For searches on or after 1 April 2026, Section 246 of the 2025 Act applies (FAQs 6 and 7). Where a notice under Section 127 of the 1961 Act for transfer of jurisdiction or PAN migration was issued before 1 April 2026, the transfer is completed under Section 127 read with Section 536(2)(e); later transfers use Section 243 of the 2025 Act (FAQ 9).
Attachment, recovery, penalty and prosecution
| Issue | Period before 1 April 2026 | From 1 April 2026 |
|---|---|---|
| Provisional attachment | Section 281B, 1961 Act | Section 500, 2025 Act |
| Director's liability for private company tax dues | Section 179, 1961 Act | Section 323, 2025 Act |
| Penalty for default in payment of tax | Section 221, 1961 Act, via Section 536(2)(d) | Section 412, 2025 Act |
| Tax clearance certificate | Section 230, 1961 Act, for the relevant earlier period | Section 420, 2025 Act |
Recovery of demands for the old period may proceed under either Act, through Section 536(2)(c) or Section 536(2)(i) (FAQ 11). Prosecution follows the provision under which the default occurred: the FAQs cite Sections 276 and 275A of the 1961 Act for old-period defaults and Section 477 of the 2025 Act for new ones (FAQ 15). Retention of seized books and impounded records also follows the Act under which the search or survey was made, for example Section 132(8) or 133A(3)(ia) of the 1961 Act, or Section 251(3) or 253(5)(c) of the 2025 Act (FAQ 16).
Trust registrations, 80G approvals and lower TDS certificates
- Registrations and approvals already granted under Section 12AB or Section 80G of the 1961 Act remain valid under Section 536(2)(j) (FAQ 19).
- Applications pending on 1 April 2026 that seek approval up to tax year 2025-26 continue under the 1961 Act through Section 536(2)(c) and (e). Pending applications seeking approval from tax year 2026-27 onward may be treated administratively as filed under the matching 2025 Act provisions (FAQs 18 and 20).
- Other pending applications for benefits under the 1961 Act are disposed of under Section 536(2)(c) or (e) (FAQ 17).
- Lower or nil deduction certificates already issued are protected by Section 536(2)(b) read with Section 536(2)(j). Section 197 applications pending for tax year 2026-27 may be treated as filed under the 2025 Act, and applications made on or after 1 April 2026 are processed entirely under the 2025 Act (FAQs 21 to 23).
What CAs and tax practitioners should check
When a notice or summons reaches a client after 1 April 2026, first check which period it relates to. A notice for assessment year 2025-26 or earlier can validly cite the 1961 Act. For tax year 2026-27 matters, the notice should cite the 2025 Act section.
For charitable trusts and NGOs, practitioners should confirm whether a pending 12AB or 80G application sought approval from tax year 2025-26 or from 2026-27, since the FAQs route the two differently. For clients relying on a lower or nil TDS certificate, a certificate issued before 1 April 2026 stays valid for its period, while a pending 2026-27 application will be decided under the 2025 Act. Directors of private companies facing recovery should note that the liability section depends on the period of the underlying demand.
Updated on 27 September 2026: Added the official CBDT FAQs (F. No. 370149/107/2026-TPL) and set out the answers on summons, searches, jurisdiction, recovery, penalties, prosecution, trust approvals and lower TDS certificates, with practical checks for CAs and tax practitioners.
