What happens to pending tax cases under the new Income-tax Act 2025? CBDT explains

The Central Board of Direct Taxes (CBDT) has issued a comprehensive set of Frequently Asked Questions (FAQs) to clarify how pending tax proceedings and applications will be handled as India transitions to the new Income-tax Act, 2025, which took effect on April 1, 2026.

Released via an office memorandum on July 6, 2026, the FAQs address requests from taxpayers and businesses seeking clarity on the transition provisions under Section 536 of the new Act. The guidelines cover critical areas including pending tax assessments, Lower Deduction Certificates (LDCs), No Deduction Certificates (NDCs), tax recovery, search cases, and prosecutions.

Pending tax assessments to continue under old law

The CBDT has clarified that proceedings relating to tax years before April 1, 2026 will continue under the repealed Income-tax Act, 1961.

"The provisions of the repealed Income-tax Act shall continue to apply to any proceeding pending on the date of commencement of this Act and to any proceedings initiated on or after the 1st April, 2026... in respect of any tax year beginning before the 1st April, 2026 and such proceedings shall be carried out as per the procedure specified in the repealed Income-tax Act," CBDT said in the FAQ released on July 6.

Pending lower TDS applications

The FAQ also clarifies how pending applications for Lower Deduction Certificate (LDC) and No Deduction Certificate (NDC) will be handled after the new law came into force.

"For matters relating to LDC/NDC pertaining to tax year 2026-27, the provisions of Income-tax Act, 2025 are applicable. Accordingly, where an application under section 197 of the Income-tax Act, 1961 filed on or before 31.03.2026 remains pending as on 01.04.2026 and approval is sought from Tax Year 2026-27 onwards, it may be administratively treated as having been filed under the corresponding provisions of the Income-tax Act, 2025 and approvals under corresponding sections of Income-tax Act, 2025 may be considered/processed," CBDT noted.

Applications for lower or no deduction certificates filed on or after April 1, 2026 will be dealt with entirely under the provisions of the Income-tax Act, 2025.