Short Title Extent Commencement

Section 1 — SHORT TITLE, EXTENT AND COMMENCEMENT

STATUTORY ARCHITECTURE

Section 1 is the gateway provision of the Income-tax Act, 2025. It establishes — (a) the formal title, (b) the territorial extent, (c) the commencement date. The substantive operative provisions follow from s. 2 (definitions) and s. 4 (charge). The Act, being a Central Act, derives its legislative authority from Entries 82 (taxes on income other than agricultural income) and 92A (taxes on inter-State commerce) of List I of the Seventh Schedule to the Constitution. Section 1(3) carries the operative commencement language — 'Save as otherwise provided in this Act' — meaning that some sections may come into force on dates other than 1-4-2026 by virtue of specific notification (e.g., transitional provisions, certain TDS / faceless framework provisions).

HISTORICAL CONTEXT

The Income-tax Act, 2025 is the third post-Independence consolidation of India's income-tax law — preceded by the Indian Income-tax Act, 1922 (operative 1-4-1922 to 31-3-1962) and the Income-tax Act, 1961 (operative 1-4-1962 to 31-3-2026). The Direct Taxes Code, 2010 was an earlier proposed replacement; it lapsed without enactment. The 2025 Act incorporates lessons from the DTC drafting exercise and the 64-year jurisprudence accumulated under the 1961 Act.

JUDICIAL EVOLUTION — Construction of Title / Extent / Commencement

The Supreme Court in CIT v. Vatika Township (P.) Ltd., (2014) 367 ITR 466 (SC) [Constitution Bench], settled the foundational construction principle for new tax legislation — provisions are presumed PROSPECTIVE unless the legislative intent for retrospectivity is unambiguous.

HELD: Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. (per Vatika Township ¶ 27).

"Like the Constitution Bench of this Court has noted, the principle of retrospectivity is a question of intention. Unless the language used plainly manifests in express terms or by necessary implication a contrary intention, statute should be construed as having a prospective operation only." (¶ 30)

The Vatika Township principle directly governs the 2025 Act's commencement: provisions take effect 1-4-2026 prospectively for Tax Year 2026-27 onwards. Pending matters under the 1961 Act continue under the 1961 Act framework, by virtue of the savings clause in s. 536.

JUDICIAL EVOLUTION — Construction of Beneficial Provisions

In K.P. Varghese v. ITO, (1981) 131 ITR 597 (SC), the Supreme Court (Bhagwati, J., as His Lordship then was) held that statutory provisions in a fiscal Act must be construed contextually; a literal construction producing absurdity must yield to legislative intent.

HELD: A statutory provision must be construed contextually. A literal construction which leads to absurdity or works manifest hardship must be avoided. The construction which gives effect to the legislative intent and avoids absurdity must be preferred. (per K.P. Varghese ¶ 14).

DEPARTMENTAL PRACTICE — TRANSITION FROM 1961 ACT

CBDT Notification G.S.R. 198(E) of 31-03-2026 notifies the Income-tax Rules, 2026 effective 1-4-2026. All forms, certificates, and procedural compliances under the 1961 Rules continue in respect of pending matters; new compliances post 1-4-2026 follow the 2026 Rules. CBDT Circular F. No. 370142/14/2026-TPL dated 28-03-2026 provides transitional guidance — open assessments under 1961 Act continue under 1961 Act; new assessments / reassessments commenced on or after 1-4-2026 follow 2025 Act framework, even where income relates to AY 2025-26 or earlier (subject to substantive law of the relevant AY).

PRACTITIONER PLANNING — REGIME-MAPPING

Every pending matter as on 1-4-2026 must be classified by reference to (a) the AY to which it relates, and (b) the Act under which proceedings are commenced. Examples: (i) Assessment closed for AY 2024-25 under 1961 Act, but s. 263 revision commenced post 1-4-2026 — revision is u/s 367 of 2025 Act applied to substantive 1961 provisions. (ii) Reassessment for AY 2022-23 commenced 1-1-2026 (pre-Act-commencement) — continues under 1961 ss. 147-149 framework. (iii) Penalty proceedings for misreporting in AY 2025-26 commenced post 1-4-2026 — procedure under 2025 Act s. 470A applied to 1961 substantive computation.

PRACTITIONER PLANNING — DUAL-TREATISE WORKFLOW

Practitioners should maintain — (a) the Bharat Tax 2025 Treatise as the prospective compliance reference for Tax Year 2026-27 onwards; (b) the Bharat Tax 1961 Treatise as the legacy reference for AY 2025-26 and earlier matters. Both treatises should be open during any client engagement during the FY 2026-27 transition window, since most matters will straddle both frameworks.

LITIGATION DEFENCE

• For any retrospective application of 2025 Act provisions to pre-1-4-2026 events — invoke Vatika Township to defeat.
• For purported overriding of 1961 Act vested rights — examine s. 536 savings clause; cite General Clauses Act, 1897 s. 6 (savings of repealed Act) by analogy.
• For doubt on commencement of specific sub-section / sub-clause — examine the operative CBDT notification under s. 1(3).

CROSS-REFERENCES

• Section 2 (Definitions) — operative for entire Act, including this section.
• Section 3 (Tax year) — replaces 'previous year' terminology of 1961.
• Section 4 (Charge of income-tax) — substantive operative provision.
• Section 536 (Repeal and savings) — preserves 1961 Act for transitional matters.
• Income-tax Rules, 2026 (G.S.R. 198(E)) — operative subordinate legislation.
• CBDT Circular F. No. 370142/14/2026-TPL — transition guidance.