Income Tax · New Income Tax Act 2025

Transition Provisions: What Happens to Pending Assessments & Appeals Under the Income-tax Act 2025

Finin2min Tax Desk·June 2026·6 min readTRANSITION · ACT 2025

If you have an open income tax assessment, a pending appeal before CIT(A) or ITAT, or an ongoing reassessment proceeding when the Income-tax Act, 2025 takes effect on 1 April 2026, you may be wondering: does my case now fall under a different law entirely? The answer, based on the standard 'savings clause' approach used in major tax law transitions, is reassuring — here's what to expect.

The General Principle: Savings Clauses

When a tax statute is repealed and replaced, it's standard legislative practice to include a 'savings clause' (or transitional provisions) that preserves the validity of actions already taken under the old law and ensures pending proceedings continue without disruption. Major tax law transitions — including India's GST rollout, which replaced multiple indirect tax statutes — relied on such savings clauses to ensure pending assessments, refunds, and appeals under the old laws continued to be processed under the framework (and often the same authorities) that existed when the proceeding began. The Income-tax Act, 2025 is expected to follow this same approach for income tax proceedings.

What This Likely Means in Practice

Situation as of 31 March 2026	Expected Treatment
Assessment for FY2024-25 or earlier, not yet completed	Continues to be processed under the framework/procedure applicable when initiated, with section references understood as per the old Act for that period
Appeal pending before CIT(A)/ITAT	Continues before the same appellate authority; the substantive law applied is the law as it stood for the relevant assessment year (i.e., the old Act's provisions for pre-FY2026-27 years)
Refund due for FY2025-26 (AY 2026-27) or earlier	Processed under the existing refund framework, even if processed after 1 April 2026
Reassessment/reopening notice for old years	Governed by the limitation periods and procedures applicable under the 1961 Act for that assessment year
Penalty proceedings initiated before 1 April 2026	Continue under the provisions applicable when initiated

⚠ Key takeaway: The Income-tax Act, 2025 governs income, transactions, and compliance obligations arising from Tax Year 2026-27 (1 April 2026) onward. Everything relating to FY2025-26 and earlier — including pending disputes about those years — continues to be governed by the framework of the Income-tax Act, 1961, even though that Act stands repealed for future years. This dual-track operation during the transition period is standard and expected.

What You Should NOT Do

Don't assume a pending appeal becomes invalid or needs to be refiled under the new Act — appeals continue before the same forum (CIT(A), ITAT, High Court, Supreme Court) under the procedural framework that applied when filed.
Don't cite new Act section numbers for old-year disputes — if your dispute relates to, say, FY2023-24, continue referencing the old Section 80C, 194C, etc. as applicable to that year. Citing the new Section 123/393 numbers for an old-year matter could create confusion.
Don't ignore notices relating to old years assuming they're now governed by a 'new' law that doesn't apply to you — the underlying tax liability and dispute resolution process for pre-FY2026-27 years continues regardless of the new Act's commencement.

What Professionals Should Track

Tax professionals handling a mix of old-year disputes and new-year compliance will, for some years, need to operate in both frameworks simultaneously — citing 1961 Act provisions for ongoing disputes about FY2025-26 and earlier, while citing 2025 Act provisions for FY2026-27 compliance. This dual-framework period is expected to last for several years, until all pending matters relating to pre-2026-27 years are resolved through the appellate hierarchy (which can take years for matters reaching ITAT, High Court, or Supreme Court).

If You're Unsure Which Framework Applies

For any specific pending matter, the determining factor is the assessment year/tax year to which the dispute relates, not the date on which a particular notice or order is issued. A notice issued in 2027 relating to FY2024-25 (AY2025-26) is governed by the 1961 Act framework for that year; a notice issued in 2027 relating to Tax Year 2026-27 is governed by the 2025 Act. When in doubt, consult a CA familiar with the specific transitional provisions as finally notified.

Frequently Asked Questions

Will my pending income tax appeal become invalid when the Income-tax Act 2025 takes effect? ▼

No. Based on the standard savings-clause approach used in major tax law transitions, pending appeals before CIT(A), ITAT, or higher courts are expected to continue before the same forum under the procedural framework applicable when they were filed. The substantive law applied to the dispute remains the law as it stood for the relevant assessment year — i.e., the Income-tax Act, 1961 for years before FY2026-27.

Which Act applies to a tax notice I receive in 2027 about my FY2024-25 income? ▼

The determining factor is the year to which the notice relates, not the date the notice is issued. A notice relating to FY2024-25 (AY2025-26) is governed by the Income-tax Act, 1961 framework applicable to that year, even if the notice itself is issued in 2027 after the Income-tax Act, 2025 has taken effect for later years.

Do I need to refile any pending refund claims because of the new Act? ▼

There is no indication that taxpayers need to take any action regarding pending refund claims for FY2025-26 or earlier years because of the Income-tax Act, 2025's commencement. Such refunds are expected to continue being processed under the existing framework, even if processing occurs after 1 April 2026.

⚠ This article describes the general legislative approach to transition/savings clauses in major tax law replacements and its likely application to the Income-tax Act, 2025 (effective 1 April 2026), based on publicly available analyses as of June 2026. The exact transitional provisions are subject to the final text of the Act and any transition rules notified by CBDT. If you have a pending assessment, appeal, or notice, consult a qualified CA or tax litigator for guidance specific to your case.