Understanding Transitional Provisions to Income Tax Act 2025 (ITA25) from Income Tax Act 1961 (ITA61)

The Income Tax Act, 2025 (ITA25) will replace the Income Tax Act, 1961 (ITA61), effective 1 April 2026. Transitional provisions ensure continuity by clarifying which Act governs past years, mapping old sections to new ones, and maintaining existing frameworks for payments, TDS/TCS, and refunds.

We herewith try to outline certain key issues and To-Dos relating to ITA25 implementation from 1st April 2026 as follows

A. Exemptions granted/ Choices made in earlier Act, will continue in ITA25

B. LTDS Certification application in April 2026 under ITA25 For Tax Year (TY) 26-27 in Form 128 and electronic process

C. Section 194C Entry in ERP from 1st April 2026 under Section 393, Table 1, Entry 6(i) or 6(ii). Similarly, all TDS would be deducted under other entries in Section 393.

D. All TCS Collections Entry in ERP from 1st April 2026 under Section 394

E. TDS/ TCS payment on 30th April under ITA61 for AY26-27

F. TDS/ TCS payment on 7th May under ITA25 for TY26-27

G. Advance Tax Challan to be used on 15th June under ITA25 for TY26-27

H. TDS/ TCS Return on 31st July under ITA25 for TY26-27 under New TDS/TCS Return Forms

I. TDS/ TCS Return on 31st May under ITA61 for AY26-27

J. ITRs to file for FY 25-26 under ITA’25/ ITA61 - AY26-27

K. Tax Payment for FY 25-26 under ITA61 for AY26-27

L. For returns filed till FY 25-26, Assessments would be under ITA61

M. Appeal Forms to be used for filing the appeals for AY26-27 or earlier would be those of ITA61.

N. Refunds already sanctioned will be available.

O. TDS Credits, MAT/AMT Credits, brought forward losses, etc need to be carried forward judiciously from ITA61 to ITA25.

P. Income Tax/ NSDL/ TRACES Portal changes need to be dealt with judiciously so that there is no litigation for technical glitches.

Q. Refunds earlier sanctioned in ITA61 can be adjusted against dues of ITA25; Dues of ITA61 can be adjusted against refunds of ITA25

R. Tax Positions taken under ITA61 need to be analysed and the impact of the ITA25 needs to be understood and calibrated by taxpayers.

S. Can ‘re-opening’ be done on the basis of a judgment of a Court under ITA25 even incase similar matter is settled in ITA61 – Multi-dollar question, which will be answered as we navigate to the new regime.

T. All rights, privileges, obligations or liabilities acquired, accrued or incurred under ITA61 or orders under ITA61 will be saved.

U. Penalty for proceedings on/before FY 25-26 under ITA61

V. Approval given, recognition granted, circular, direction, instruction, notification, order or rule issued will continue so far as it is not inconsistent with ITA25

W. For Limitations expired before 31.3.26, the limitation cannot be revived