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Income Tax · New ActRepeal and savings under Section 536: practical examples
Section 536 is the bridge between the two income-tax laws. It repeals the 1961 Act but keeps old proceedings, approvals, carried-forward losses and circulars alive. Here is what it saves, with practical examples for taxpayers and businesses.
Whenever a law is replaced, the new law must answer an awkward question: what happens to everything done under the old one? The Income-tax Act, 2025 answers it in Section 536 – Repeal and savings, read with the General Clauses Act, 1897.
What Section 536 does
- Repeals the Income-tax Act, 1961 from 1 April 2026.
- Saves anything done or any action taken under the old Act – returns, assessments, orders, notices, appeals, penalties – so that they continue as if the old Act had not been repealed.
- Continues rules, notifications, circulars, approvals, registrations and certificates issued under the old Act, to the extent they are consistent with the new Act, until they are replaced.
- Carries over entitlements such as unabsorbed losses and depreciation, for the remaining period and subject to the new Act's conditions.
Practical examples
| Situation | Effect of savings clause |
|---|---|
| Scrutiny for AY 2024-25 pending in 2026 | Completed under 1961 Act |
| Business loss of FY 2023-24 (8-year carry-forward) | Can be set off in Tax Year 2026-27 onwards for the remaining years |
| Unabsorbed depreciation | Carried forward without time limit, as before |
| 80G approval valid till AY 2028-29 | Continues; renew under new Act when due |
| Lower TDS certificate issued in March 2026 for FY 2025-26 | Valid for that period only |
| CBDT circular on TDS on GST component | Continues unless inconsistent |
| MAT credit of earlier years | Carried forward, subject to Budget 2026 changes (set-off capped and no fresh credit from 1 April 2026, as reported) |
Example 1: carried-forward business loss
Example: Sharma Logistics, a partnership in Bawana, had a business loss of ₹12,00,000 in FY 2023-24, assessed and carried forward. It earned ₹4,00,000 in FY 2024-25 and ₹3,00,000 in FY 2025-26.
| Year | Act | Income before set-off | Loss set off | Loss remaining |
|---|---|---|---|---|
| FY 2024-25 | 1961 | ₹4,00,000 | ₹4,00,000 | ₹8,00,000 |
| FY 2025-26 | 1961 | ₹3,00,000 | ₹3,00,000 | ₹5,00,000 |
| Tax Year 2026-27 | 2025 | ₹6,00,000 | ₹5,00,000 | Nil |
The loss of FY 2023-24 can be carried forward for eight years from that year. The new Act honours the remaining period. The return for Tax Year 2026-27 should show the brought-forward loss with its year of origin. See business loss set-off and carry-forward.
Example 2: pending penalty
A penalty notice under Section 270A for AY 2022-23, issued in January 2026, continues. The reply cites Section 270A of the 1961 Act; immunity, if eligible, is sought under the old Section 270AA procedure for that year.
Example 3: approvals of charitable trusts
A trust in Shalimar Bagh holds 12AB registration valid up to AY 2027-28 and 80G approval for the same period. Both continue. When renewal falls due, it will be filed under the corresponding provisions of the 2025 Act and the 2026 Rules.
What Section 536 does not do
- It does not let you choose the more favourable Act for a new year – Tax Year 2026-27 is governed by the 2025 Act only.
- It does not revive time-barred proceedings.
- It does not keep alive circulars that conflict with the new Act.
How to use it in practice
- In replies and appeals for old years, cite the 1961 Act provision and, if useful, mention that it is saved by Section 536.
- In return preparation for Tax Year 2026-27, carry forward old losses with proper year-wise schedules.
- Keep copies of old approvals and registrations with their validity dates.
- When relying on an old circular, check whether it has been withdrawn or reissued under the new Act.
Key takeaway
Section 536 makes the transition orderly: the past continues under the past law. Most taxpayers will never cite it, but anyone with open cases, losses, trust approvals or MAT credit should understand it. For a review of your carried-forward items before the first new-Act return, contact our income tax team.
Official references
Provisions discussed (summaries in our Law Library):
- Income-tax Act, 2025 – Section 536 (corresponds to —): Repeal and savings
Official sources to verify the current text, notifications and circulars:
Frequently asked questions
Does Section 536 allow old carried-forward losses to be set off under the new Act?
Yes. Losses and unabsorbed depreciation determined under the 1961 Act can be carried forward and set off under the 2025 Act for the remaining period, subject to the conditions of the new Act.
Are 12AB registrations and 80G approvals still valid?
Yes. Registrations and approvals granted under the 1961 Act continue for their validity period, subject to renewal under the new Act.
Do old CBDT circulars still apply?
Circulars and notifications under the 1961 Act continue to the extent they are not inconsistent with the 2025 Act, until rescinded or replaced.
What about offences committed before April 2026?
Prosecution and penalties for defaults before 1 April 2026 continue under the 1961 Act provisions.
Does Section 536 let the department reopen very old years?
No. It saves proceedings and powers as they existed, but does not extend time limits that have already expired. Time-barred years cannot be revived.
Are lower deduction certificates issued for FY 2025-26 valid in Tax Year 2026-27?
No. A certificate is valid only for the period stated. A fresh application is needed for Tax Year 2026-27 under the new provisions.
What happens to approvals under Section 10(23C) or 12AB?
They continue for their validity period. Renewals fall due under the corresponding provisions of the 2025 Act and the 2026 Rules.
This article is general information on the law as on 10 November 2026, written for educational purposes. It is not professional advice for your case. Section numbers under the Income-tax Act, 2025 should be confirmed with the official section mapping on the Income Tax Department website before use in filings.
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