CBDT clarification: All approvals like Nil or lower TDS certificate and existing tax benefits will continue under Income Tax Act, 2025; Here’s what it means for you

On June 6, 2026 the Central Board of Direct Taxes (CBDT) issued an office memorandum under which many clarifications and frequently asked questions (FAQ) were issued for the benefit of taxpayers who were confused with Income Tax Act, 1961 and Income Tax Act, 2025.

The office memorandum from CBDT read as follows: “Various representations are received by TPL Division since Income-tax Act, 2025 has come into force from 01.04.2026 requesting to furnish comments/inputs seeking clarification related to transition provisions under section 536. In this regard, the undersigned is directed to forward the FAQs related to section 536 of the Income Tax Act, 2025 as per Annexure, for necessary action towards its issuance/publication.”

This office memorandum by CBDT is not in public domain and this reporter has obtained it via his sources.


Naveen Wadhwa, vice-president, Taxmann said to ET Wealth Online: “The CBDT has clarified that where an application under Section 197 is filed on or before 31st March, 2026, remains pending, and approval is sought in Tax Year 2026-27, the pending application will be administratively treated as an application under the corresponding provisions of the ITA 2025, i.e., 395(1). The tax department will process and issue the certificate under the new Income Tax Act, 2025.”

Therefore, Wadhwa says that taxpayers are not required to take any additional action solely because of the transition from the Income Tax Act, 1961 to the Income Tax Act, 2025.

Wadhwa says: “Taxpayers need to respond only if the Income-tax Department seeks any clarification or additional documents during the processing of the application.”

Also read: Now request for nil or lower TDS deduction for property and other transactions via this new form as per Income Tax Act, 2025; See what’s changed

Here’s what this clarification about lower, nil TDS means for you

The most important point to note about this entire office memorandum containing the various FAQs issued by CBDT is that these FAQs are clarificatory in nature and are intended to ensure a smooth transition from the Income-tax Act, 1961 to the Income-tax Act, 2025.

Chartered Accountant Suresh Surana said to ET Wealth Online: “A key practical takeaway is that taxpayers must carefully identify the date of filing, date of initiation of proceedings, and the relevant tax year before deciding whether the Income-tax Act, 1961 or the Income-tax Act, 2025 will apply.”

According to Surana, the FAQs also provide comfort that existing approvals and benefits will not lapse merely because the new Income Tax Act, 2025 has come into force.

Surana says: “Registrations or approvals already granted under sections such as 12AB or 80G of the 1961 Act will remain protected. Similarly, applications filed before March 31, 2026 and pending as on 1 April 1, 2026 will be processed depending on the year for which the benefit is sought.

Surana also says that if the respective tax benefit relates to earlier years, the Income Tax Act, 1961 may continue to apply; if it relates to tax year 2026-27 onwards, the application may be administratively treated as one filed under the corresponding provisions of the Income Tax Act, 2025.

The same principle has been clarified for lower deduction or no-deduction TDS certificate applications.

Surana says: “Lower or nil TDS certificates already issued before 31 March 2026 remain protected, pending applications for tax year 2026-27 onwards may be processed under the corresponding provisions of the 2025 Act, and fresh applications filed on or after April 1, 2026 will be governed entirely by the new Income Tax Act, 2025.”

CBDT issued these clarifications and FAQs to provide certainty to taxpayers

Surana says that the CBDT FAQs are clarifications essentially meant to provide certainty to taxpayers during the transition from the Income-tax Act, 1961 to the Income-tax Act, 2025.

The key message is that the repeal of the Income Tax Act, 1961 does not automatically invalidate the existing proceedings, notices, approvals, certificates, applications or obligations relating to the period prior to April 1, 2026.

Surana says: “Such matters will continue to be governed by the relevant provisions of the Income Tax Act, 1961 through the saving mechanism under section 536 of the Income-tax Act, 2025.”

Surana says that for taxpayers, this means that the applicable law will largely depend on the period to which the matter relates and the stage at which the action was initiated.

Surana explains using an example. For instance, summons, notices, post-search proceedings, recovery, penalty, prosecution, retention of books and similar actions relating to tax years prior to April 1, 2026 may continue under the Income-tax Act, 1961, even if certain consequential actions are taken after 1 April 2026.

Surana says: “On the other hand, matters pertaining to tax year 2026-27 onwards will generally be dealt with under the Income-tax Act, 2025.”

From a compliance perspective, Surana says that taxpayers should carefully identify the relevant tax year, the date of initiation of proceedings or application, and the specific provision involved before determining whether the 1961 Act or the 2025 Act applies.

What did CBDT say in the office memorandum?

Some of the FAQs issued by CBDT are:

Whether retention of books of accounts is to be done under Income-tax Act, 1961 or Income-tax Act, 2025?

Ans: In this regard, first the section under which action has taken place is to be ascertained. Accordingly, retention of books of account needs to be done.
For Example, -

• (i) if the search action is initiated under section 132 oflncome-taxAct, 1961 then retention of books of accounts to be done under section 132(8) oflncome-tax Act, 1961 and likewise.
• (ii) If the search is initiated under section 247 oflncome-taxAct, 2025 then retention of books of accounts to be done under section 251(3) oflncome-tax Act, 2025.
• (iii) if the survey action is conducted under section 133Aoflncome-taxAct, 1961 then the impounding is to be done under 133A(3)(ia) oflncome-tax Act, 1961 and if the survey is conducted under section 253 of Income-tax Act, 2025 then the impounding is to be done under section 253(5)(c) oflncome-taxAct, 2025.
• (iv) similar principle as referred in (iii), applies to assessment proceeding.

Pending Lower Deduction Certificates/ No Deduction Certificate Applications

What happens to Lower deduction Certificate (LDC)/No deduction Certificate (NDC) applications that were filed and disposed of on or before 31 March 2026?

Ans: For the application filed on or before 31st March 2026 and disposed of also on or before 31st March 2026, the certificates issued in respect of these applications are protected in view of provisions of section 536(2)(b) read with section 536(2)G) of the Income-tax Act, 2025.

How will applications for LDC/NDC filed on or before March 31, 2026 but pending as of April 1, 2026 be treated?

Ans: 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.

How will applications for LDC/NDC filed on or after April 1, 2026 be handled?

Ans: Applications filed on or after 1 April 2026 will be dealt with entirely in accordance with the provisions of the Income-tax Act, 2025.

Pending Applications under section 12AB/80G of the Income-tax Act, 1961

How will registration/approval application under Section 12AB or Section 80G of the Income-tax Act, 1961, filed on or before 31.03.2026, pending as on 01.04.2026 and where approval is sought from Tax Year 2025-26 onwards be processed?

Ans: Where a registration/approval application under Section 12AB or Section 80G of the Income-tax Act, 1961, filed on or before 31.03.2026, is pending as on 01.04.2026 and approval is sought from Tax Years including 2025-26, the proceedings may continue under the Incometax Act, 1961 by virtue of sections 536(2)(c) and 536(2)(e) of the Income-tax Act, 2025.

Will registration/approval granted for a period under Section 12AB or Section 80G of the Income-tax Act, 1961 remain valid?

Ans: Yes. Any registration or approval granted under the Income-tax Act, 1961 remains valid and protected under the section 536(2)G) of the Income-tax Act, 2025.

How will pending applications under section 12AB/80G of the Income-tax Act, 1961 seeking approval from Tax Year 2026-27 onwards be treated?

Ans: For matters relating to exemptions/deductions pertaining to tax year 2026-27, the provisions of Income-tax Act, 2025 are applicable.

Accordingly, where an application under section 12AB/80G of the Income-tax Act, 1961 filed on or before March 31, 2026 remains pending as on April 1, 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 Incometax Act, 2025 and approvals under corresponding sections of Income-tax Act, 2025 may be considered/processed.