Quick Summary
The Government has proposed a significant clarification to the repeal and savings provisions under the Income-tax Act, 2025 , addressing situations where deductions or income exclusions allowed under the repealed Income-tax Act, 1961 may need to be taxed in later years. This clarification is proposed through an amendment to Section 536(2)(h) of the new Act and is aimed at closing interpretational gaps that could otherwise lead to unintended tax benefits. Existing Provision Under Section 536(
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FAQ :
The amendment clarifies that past deductions or income exclusions allowed under the repealed Income-tax Act, 1961, will be treated as income under the new Income-tax Act, 2025, from the tax year 2026-27 onwards, even if no conditions were violated.
The amendment will take effect from 1st April 2026 and will apply to the tax year 2026-27 and subsequent tax years.
No, the amendment specifically addresses situations where amounts allowed as deductions or not included in income under the 1961 Act will be deemed income under the 2025 Act, even without any violation of conditions.
This clarification is being made to prevent unintended tax leakage, ensure continuity of taxation principles, reduce ambiguity, and align old-law tax triggers with new-law enforcement during the transition to the new tax law.
Taxpayers who claimed deductions or exclusions under the old Income-tax Act, 1961, should carefully evaluate whether such amounts could now be deemed as income under the Income-tax Act, 2025.
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