Finance Bill 2026: What is the proposed change in repeal and saving clause of Income-tax Act 2025?

Finance Bill 2026 has proposed to amend the repeal and savings clause of Income-tax Act 2025. With the proposed change, the Finance Bill 2026 has plugged a loophole that could have otherwise led to tax disputes. Let's see more details about the new provision, as per the FAQs shared by the Income-tax Department:

What is the existing rule?

As per Section 536(2)(h) of the Income-tax Act, 2025, if a deduction has been allowed or any income has not been included in the total income under the repealed Income-tax Act, 1961, on violations of the conditions mentioned in the respective sections of the repealed Act, it will become deemed income under the Income-tax Act, 2025 in the year in which violation takes place.

What changes have been proposed by the Finance Bill 2026

The Finance Bill has proposed that any amount that has been allowed as deduction or which has not been included in the total income under the repealed Income-tax Act, 1961 for any other reason, shall be deemed income of the person, if such amount was to be included in the total income under the repealed Income-tax Act, 1961 for any other reason.

Why has this change been proposed?

The existing rule only covers situations where on violation of conditions mentioned in the respective sections of the repealed Act, the amount will be deemed to be the income of the person. However, it does not cover situations, where as per the provisions of the repealed Act, the amount is required to be added in the total income, even when no conditions are violated.

"To ensure that such amounts are deemed to be income of the person under the Income-tax Act, 2025, the aforesaid change is proposed," the Income-tax Department says.

What will be the impact of the proposed amendment?

The amendment will provide clarity that any amount, which had been allowed as deduction or which was included in the total income under the provision of Income-tax Act, 1961, shall be deemed to be the income, if it was required to be added in the total income under the said act, irrespective of violations of conditions or for any other reason.