CHAPTER XXIII — MISCELLANEOUS

Section 536 — Repeal and Savings

BLOCK 1 : SECTION TEXT (NEW ACT, 2025)

Repeal and savings.

536. (1) The Income-tax Act, 1961 (43 of 1961) is hereby repealed.

(2) The repeal shall not — (a) revive anything not in force; (b) affect the previous operation of the repealed Act; (c) affect any right, privilege, obligation, or liability acquired, accrued, or incurred under the repealed Act; (d) affect any penalty, forfeiture, or punishment incurred under the repealed Act; (e) affect any investigation, legal proceeding, or remedy in respect of any such right / privilege / obligation / liability / penalty / forfeiture / punishment; and any such investigation / proceeding / remedy may be instituted, continued, or enforced as if this Act had not been passed.

(3) Notifications, instructions, circulars, orders, schemes, rules, regulations, and notifications issued under the 1961 Act shall, so far as they are consistent with the provisions of this Act, continue to be in force and shall be deemed to have been issued under the corresponding provisions of this Act, until rescinded or modified.

(4) References in any other law to the Income-tax Act, 1961 shall be construed as references to the corresponding provisions of this Act.

(5) Saving for completed and pending assessments: any assessment / reassessment / appeal / revision / penalty / prosecution proceedings pending immediately before commencement of this Act shall continue under the 1961 Act as if this Act had not been passed; final orders therein shall, however, attract the procedural provisions of this Act for purposes of recovery / refund / appeal.

BLOCK 2 : CORRESPONDING SECTION IN OLD ACT (1961)

[There is no analogous savings clause in the 1961 Act for prior law; section 297 of the 1961 Act repealed the 1922 Act with similar savings.]

Section 297 of the 1961 Act — Repeal of the 1922 Act — provided for similar savings, including continuance of pending proceedings under the 1922 Act, validity of assessments / refunds / appeals already commenced, and continuity of subordinate legislation.

BLOCK 3 : COMMENTARY

Section 536 is the single most consequential operative provision in the 2025 Act. Without it, 64 years of subordinate legislation, judicial precedent, pending proceedings, and accrued tax liabilities would all be jeopardised by the repeal. Section 536 is the bridge ensuring continuity.

Sub-section (1) — Repeal. Effective from 1 April 2026, the 1961 Act stands repealed. From that date, a new chapter in Indian direct-tax law begins.

Sub-section (2) — Savings. Five-fold savings: (a) revival of repealed law: nothing comes back to life; (b) previous operation: everything done under the 1961 Act stands; (c) accrued rights / obligations: tax liability for FY 2025-26 and earlier years remains under 1961 Act; refund claims for those years preserved; (d) penalties / forfeitures: penalties imposed under 1961 Act remain; (e) investigations / proceedings: ongoing search / assessment / appeal proceedings continue under 1961 Act.

Sub-section (3) — Subordinate legislation continues. CBDT circulars, notifications, schemes, rules — all continue. Practitioners must read 1961-era notifications as if issued under the corresponding 2025-Act section. The CBDT will gradually re-issue notifications under the new sections; in the interim, the savings clause keeps everything alive.

Sub-section (4) — Cross-references in other laws. Other Central / State Acts that referred to the 1961 Act (Companies Act, GST Act, FEMA, RBI Act, SEBI Acts, EPF Act, ESI Act etc.) are deemed to refer to corresponding provisions of the 2025 Act. This is automatic — no individual amendment required.

Sub-section (5) — Pending proceedings under 1961 Act. The most practitioner-relevant clause: any assessment / reassessment / appeal / revision / penalty proceeding pending immediately before 1 April 2026 continues under the 1961 Act. So a scrutiny notice issued in March 2026 is governed by the 1961 Act through the entire assessment / appellate cycle, even if the orders are passed in 2027 or later. The 2025 Act applies only to fresh proceedings commenced on or after 1 April 2026.

Continuity of jurisprudence. Karimtharuvi Tea Estate v. State of Kerala (1966) 60 ITR 262 (SC) — principle that the law applicable to assessment is the law in force on the first day of the assessment year — is the foundation of section 536. CIT v. Onkar S. Kanwar (2002) 258 ITR 761 (SC) — savings clause interpretation; T. Cajee v. U. Jormanik Siem (1961) 1 SCR 750 — repeal does not affect rights accrued. All continue to apply.

Practical takeaways. (i) For all FY 2025-26 and earlier income — apply 1961 Act to assessment / appeal / refund / penalty / prosecution. (ii) For FY 2026-27 income — apply 2025 Act. (iii) For mixed-year searches / proceedings — both Acts apply year-wise. (iv) For old notifications — read as if under new sections; CBDT will republish gradually. (v) For Other-Act references — auto-update; no separate amendment exercise needed. (vi) For software / ERP — ensure dual-Act handling for at least 8-10 years post-1-April-2026 (covering 6-year reassessment + 2-year appeal cycle for FY 2025-26).

APPENDIX — Closing Note: Across All 23 Volumes

This 23-volume series traverses the entire Income-tax Act, 2025 from section 1 to section 536, mapping every section to its corresponding 1961-Act source. The substantive content of every operative rule has been preserved by the legislature; the renumbering, restructuring into Schedules, and consolidation of related sections are the principal drafting innovations. Practitioners migrating from the 1961 Act to the 2025 Act must:

• Update every internal cross-reference, working paper template, opinion template, audit working, and tax-software code from old section numbers to new — a multi-quarter exercise commencing 1 April 2026.
• Train teams on the unified "tax year" concept replacing "previous year" / "assessment year" — Volume I.
• Track CBDT re-issuance of notifications, circulars, and Rules under the corresponding new sections; section 536 keeps existing instruments alive in the interim.
• Run dual computations under old vs new tax regime (s. 202) for individuals / HUFs every year.
• Coordinate the 23 chapters into a unified compliance calendar — TDS / TCS quarterly returns; advance tax instalments; audit reports; SFT; CbCR; Master File / Local File; charitable trust audit; GAAR / TP analysis.
• Maintain dual-Act capability for FY 2025-26 and earlier assessments / appeals — these continue under the 1961 Act through 2027-2030 even as new returns are filed under the 2025 Act.

Index of Volumes