A tax law may change overnight, but tax proceedings rarely do.

That is the real lesson from the CBDT’s latest 23 FAQs on the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025. For taxpayers, businesses, charitable institutions, directors, tax teams and professionals, the immediate concern is not merely that India now has a new direct tax law. The harder question is much more practical: if an issue relates to an old year, but the notice, summons, recovery, application or certificate is handled after 1 April 2026, which Act applies?

This is not a theoretical problem. A company may receive a summons in July 2026 for information relating to FY 2024-25. A private company’s old tax demand may become irrecoverable, raising the question of director liability. A trust may have filed its 12AB or 80G application before 31 March 2026, but the application may still be pending after the new law begins. A taxpayer may have filed an application for a lower deduction certificate before the cut-off date, but the certificate may be needed for Tax Year 2026-27. In every such case, the taxpayer is not asking a philosophical question about repeal. They need to know which section applies, which form or procedure should be used, and whether the old legal position survives.

The CBDT’s FAQs try to answer precisely that. They convert the broad repeal-and-savings language of section 536 of the Income-tax Act, 2025 into usable administrative guidance. The larger message is clear: the 1961 Act has been repealed, but it has not vanished from taxpayer life. For several years, Indian tax administration will operate in a two-Act environment.

The Transition Problem: Repeal Does Not Mean a Clean Break

The Income-tax Act, 2025 came into force from 1 April 2026 and repealed the Income-tax Act, 1961. In ordinary conversation, repeal sounds final. It suggests that one law has ended and another has replaced it.

Tax law is not that simple.

Income earned before 1 April 2026, proceedings already pending, old searches, old demands, pending applications, historical defaults, past exemptions, carried-forward losses and earlier approvals cannot simply be erased. They need continuity. Without transition rules, taxpayers would face uncertainty and the Department would struggle to administer old-year matters.

That is why section 536, the repeal-and-savings provision, is central to the new regime. It preserves the old Act for specified situations even after repeal. The CBDT’s FAQs are important because they explain how this preservation works in everyday departmental action.

For business readers, the best way to understand the framework is this: the 2025 Act is the new highway, but many vehicles are still carrying old-year cargo. The law must decide whether those vehicles continue on the old route or merge into the new one.

The Core Principle: Look at the Period, the Proceeding and the Trigger

The FAQs reveal a practical three-part test.

First, identify the period to which the matter relates. If the matter relates only to a period before 1 April 2026, the old Act usually remains relevant. If the matter relates to Tax Year 2026-27 onwards, the 2025 Act generally applies.

Second, identify the nature of the action. Is it a summons, assessment, search, recovery, provisional attachment, penalty, prosecution, tax clearance certificate, application, registration or lower deduction certificate? Each category has its own procedural mapping.

Third, identify the trigger date. Was the search initiated before or after 1 April 2026? Was the application filed before 31 March 2026 or after 1 April 2026? Was the approval already granted, pending, or sought for a future tax year?

This matters because the same taxpayer may have different matters governed by different Acts at the same time. A company could file its FY 2025-26 return under the old framework, respond to a post-2026 notice for an old-year issue under the 1961 Act, apply for a new lower deduction certificate under the 2025 Act, and receive recovery action for an old demand under either enabling provision.

That is the new compliance reality.

Summons and Notices: Old-Year Matters Stay With the Old Act

The first set of FAQs deals with summons and notices. The CBDT clarifies that a summons is considered a notice for the purpose of section 536(2)(c). This is more important than it may appear.

If a summons is issued after 1 April 2026 but relates only to a period before that date, the Department may use the powers under section 131 of the Income-tax Act, 1961. This applies even where the matter flows from tax evasion petitions, suspicious transaction reports, CRS/FATCA information or similar intelligence sources, provided the underlying matter relates only to a pre-2026 period.

For taxpayers, the practical point is simple: do not assume that a post-1 April 2026 communication must necessarily be under the 2025 Act. The date of issuance is not the only factor. The period and subject matter are equally important.

Where the information or proceeding does not clearly relate to a pre-2026 period, or where it concerns Tax Year 2026-27 onwards, the Department should use the corresponding powers under the 2025 Act. For summons, the FAQ points to section 246 of the Income-tax Act, 2025.

This distinction may become relevant in real cases. Suppose a business receives a summons in September 2026 asking for documents relating to transactions during FY 2024-25. The summons may legitimately use the 1961 Act route. But if the summons concerns ongoing transactions in FY 2026-27, the 2025 Act should generally be the procedural base.

Tax teams should therefore review every notice by asking: what period does it relate to, what power has been invoked, and is the section reference aligned with section 536?

Search Cases: The Cut-Off Date Is Decisive

The FAQs draw a sharp line for search and requisition cases.

Where a search was initiated under section 132 or requisition was made under section 132A before 1 April 2026, proceedings connected with that search continue under the repealed 1961 Act as if the new Act had not been enacted. This includes post-search inquiries and assessment.

Where the search or requisition is initiated on or after 1 April 2026, the corresponding powers under the 2025 Act apply.

This is administratively sensible. Search proceedings create a chain of actions: seizure, statements, summons, post-search inquiries, assessments, retention of records, penalty and sometimes prosecution. Splitting that chain between two Acts merely because the later steps occur after 1 April 2026 would create avoidable confusion.

For businesses and promoters, this means the date of search initiation becomes a critical compliance marker. A search conducted on 30 March 2026 and a search conducted on 2 April 2026 may sit in different statutory worlds, even if many subsequent steps happen in the same calendar year.

Power to Call for Information: Same Logic, Different Section

The FAQs also address the power to call for information, which was earlier exercised under section 133(6) of the Income-tax Act, 1961 and is now mapped to section 252 of the Income-tax Act, 2025.

The CBDT clarifies that the same principles applicable to summons also apply here. If the information request relates to old-year matters, the old Act may continue to apply. If it relates to the new tax year regime, the 2025 Act applies.

In practice, this will matter for banks, companies, employers, property registrars, online platforms, consultants and other third parties receiving information requests. They should not treat a 1961 Act reference as invalid merely because the request is issued after 1 April 2026. The period and legal saving provision must be checked first.

Jurisdiction and PAN Migration: Not Always Year-Specific

Jurisdiction transfer and PAN migration are handled differently because they are not tied to one assessment year or tax year. Once jurisdiction is transferred, all matters for all years move to the new Assessing Officer.

The FAQs clarify that if a notice for transfer of jurisdiction under section 127(2) of the 1961 Act was already issued before 1 April 2026, the final transfer order can still be passed under the 1961 Act, read with section 536. But where the transfer or PAN migration is initiated on or after 1 April 2026, the order should be passed under section 243 of the 2025 Act.

This point is especially relevant in search, survey and centralisation cases where jurisdiction is often moved to a specialised officer. Taxpayers should distinguish between an old process already initiated and a fresh post-2026 jurisdictional action.

Provisional Attachment and Recovery: Enforcement Continues

The FAQs provide important guidance on enforcement actions.

For provisional attachment, the relevant Act depends on the assessment period. If the assessment relates to a tax year before 1 April 2026, provisional attachment may be made under section 281B of the 1961 Act. Otherwise, the corresponding section 500 of the 2025 Act may apply.

Recovery is even more interesting. The FAQs state that recovery of demand pertaining to a period before 1 April 2026 can be made under the 1961 Act in accordance with section 536(2)(c), and also under the 2025 Act as per section 536(2)(i). In other words, old demands remain recoverable, and repeal does not create a collection gap.

This has practical consequences. Businesses with legacy demands cannot take comfort from the repeal of the old Act. The liability does not disappear. Recovery tools remain available. The question is not whether the Department can recover old dues; it is which statutory route supports the action.

Directors, Penalties and Prosecution: The Default Period Matters

For directors of private companies, the FAQs clarify that liability must be fastened in accordance with the period to which the demand relates. If the irrecoverable demand pertains to a period when a person was a director, that person’s joint and several liability will be determined by reference to the relevant old or new provision.

Similarly, penalty for default in payment of tax demand follows the period of demand. If the demand relates to a period prior to 1 April 2026, penalty may be levied under section 221 of the 1961 Act. If it relates to a period on or after 1 April 2026, the corresponding provision under the 2025 Act applies.

The prosecution answer follows a conduct-based approach. First identify the section under which the default occurred, then launch prosecution under the corresponding legal framework. For example, if the default occurred under a provision of the 1961 Act, prosecution follows the 1961 Act route. If the default occurred under the 2025 Act, prosecution follows the new Act.

This is a useful reminder for taxpayers and directors. The law looks at when the liability or default arose. Repeal is not a shield against old non-compliance.

Books of Account and Retention: Follow the Action That Started the Process

The FAQs adopt the same practical logic for retention of books of account and impounding.

If the search action was initiated under the 1961 Act, retention of books is governed by the 1961 Act. If the search is initiated under the 2025 Act, the corresponding 2025 Act provision applies. Similar logic applies to survey and impounding.

This is important for taxpayers facing search or survey action across the transition date. The retention period, procedural validity and follow-up action should be tested against the statutory provision under which the original action was taken.

Pending Applications and Approvals: The Business Continuity Piece

The most commercially useful part of the FAQs relates to pending applications and continuing approvals.

Applications filed on or before 31 March 2026 seeking benefits under the 1961 Act may be disposed of by applying section 536 and the corresponding provisions of the old Act. This protects taxpayers who filed valid applications before the transition date and were waiting for administrative disposal.

For charitable and non-profit organisations, the FAQs specifically clarify treatment of pending applications under sections 12AB and 80G. Where an application was filed before 31 March 2026, remains pending as on 1 April 2026, and approval is sought from years including Tax Year 2025-26, the proceedings may continue under the 1961 Act. Registrations or approvals already granted under the 1961 Act remain valid and protected.

Where the pending 12AB or 80G application seeks approval from Tax Year 2026-27 onwards, it may be administratively treated as filed under the corresponding provisions of the 2025 Act.

This avoids a major disruption. Without such clarification, trusts and institutions could have faced uncertainty on whether old applications needed refiling, whether existing approvals survived, and whether donors could rely on continuing 80G status. The FAQs preserve continuity while shifting future-year treatment into the new Act.

Lower and Nil Deduction Certificates: Cash-Flow Certainty Preserved

Lower deduction certificates and no deduction certificates are critical for business cash flows. A certificate can determine whether a taxpayer suffers withholding at normal rates or at a reduced rate. For companies with thin margins, high-value contracts or recurring receipts, the difference can be significant.

The FAQs clarify that LDC/NDC applications filed and disposed of before 31 March 2026 are protected. Where an application under section 197 of the 1961 Act was filed before 31 March 2026 but remains pending as on 1 April 2026, and approval is sought for Tax Year 2026-27 onwards, it may be treated administratively as filed under the corresponding provisions of the 2025 Act. Applications filed on or after 1 April 2026 will be dealt with entirely under the 2025 Act.

For CFOs and tax teams, this means withholding planning for FY 2026-27 should not be delayed merely because of the transition. But application status, filing date and certificate period should be carefully tracked.

What Businesses Should Do Now

The practical action point is not to memorise all 23 FAQs. It is to build a transition tracker.

Every company should classify open tax matters into three buckets: matters relating to tax years before 1 April 2026, matters relating to Tax Year 2026-27 onwards, and mixed or uncertain matters. Each notice, application, recovery action, appeal, certificate and proceeding should be tagged with the applicable Act, section reference, proceeding status and responsible internal owner.

For large groups, this tracker should cover direct tax litigation, TDS certificates, trust or institutional approvals, search/survey matters, director exposure, recovery proceedings and pending applications. It should also record whether a matter was initiated before or after 1 April 2026.

This is not merely legal housekeeping. It reduces the risk of missed responses, wrong objections, incorrect section references, duplicate filings and avoidable disputes.

The Takeaway: India Has a New Tax Law, But Old-Year Governance Still Matters

The CBDT’s FAQs make one point very clear: the Income-tax Act, 2025 is not a clean administrative reset. It is a controlled transition.

The 1961 Act will continue to matter for old-year proceedings, searches, demands, penalties, approvals and applications. The 2025 Act will govern the new tax-year world. Between the two sits section 536, acting as the bridge.

For taxpayers, the strategic lesson is simple. Do not treat every post-1 April 2026 action as a new-Act action. Do not assume old approvals are lost. Do not assume old demands are dead. Do not assume pending applications need to start from zero. Identify the period, the proceeding and the trigger date, then decide the applicable legal route.

In the coming years, good tax governance will not only mean knowing the law. It will mean knowing which law applies.

That may be the most practical compliance skill of India’s two-Act transition era.