People will not have to file two income tax returns during the transition to the new Income Tax Act, 2025. Most ongoing tax proceedings, pending applications and existing approvals under Income Tax Act, 1961 will continue without interruption. These are among the key clarifications issued by the Central Board of Direct Taxes (CBDT) in a comprehensive Frequently Asked Questions (FAQ) document to help taxpayers navigate the shift to the new law.
The new Income Tax Act came into force on April 1. Since taxpayers are now dealing with both the old and the new tax laws simultaneously, the CBDT has explained how returns, tax payments, refunds, notices and various applications will be handled during the transition.
For most taxpayers, the biggest message is simple: The law applicable to a transaction depends on the tax year it relates to — not merely on the date when an action is taken.
No, you will not have to file two ITRs this year
One of the biggest concerns among taxpayers has been whether they would need to file returns under both the Income Tax Act, 1961 and the Income Tax Act, 2025 during the transition.
The CBDT has clarified that this is not the case.
Income earned during FY 2025-26 will continue to be reported through the return for Assessment Year (AY) 2026-27 under the Income-tax Act, 1961, even though the return is filed after the new Act has come into force.
The first return under the Income-tax Act, 2025 will relate to income earned in FY 2026-27 (Tax Year 2026-27) and will become due only in 2027.
The old law will continue for many matters
The CBDT has made it clear that the repeal of the Income Tax Act, 1961 does not mean ongoing tax matters automatically shift to the new law.
Several proceedings relating to AY 2026-27 and earlier years will continue under the old Act, including:
- Original income tax returns
- Revised returns
- Belated returns
- Updated returns (ITR-U)
- Scrutiny assessments
- Defective return notices
Search-related proceedings initiated before April 1, 2026
For instance, if a taxpayer files an ITR for AY 2026-27 and later discovers an error, the revised return will still be governed by the provisions of the Income Tax Act, 1961. Likewise, scrutiny proceedings for earlier assessment years will continue under the old law even if they are completed after April 1, 2026.
Existing approvals and pending applications remain protected
The CBDT has also sought to reassure taxpayers that existing registrations, approvals and certificates will not become invalid merely because a new law has replaced the old one.
Among those protected are:
- Registrations under Section 12AB
- Approvals under Section 80G
- Lower or nil TDS certificates issued before April 1, 2026
- Pending applications for lower or nil TDS certificates
- Pending PAN and TAN applications
Where an application was filed before April 1, 2026 but remains pending and relates to Tax Year 2026-27 onwards, the tax department will generally treat it as an application under the corresponding provisions of the Income-tax Act, 2025 without requiring taxpayers to submit a fresh application.
Refunds, losses and MAT credits will continue
The CBDT has clarified that taxpayers do not lose benefits earned under the old law simply because the new Act has taken effect.
Accordingly:
- Pending income tax refunds under the old Act will continue to be processed.
- Refund claims for excess TDS deducted under the old law can still be filed within the prescribed time limit.
- Business losses and capital losses determined under the old Act can continue to be carried forward under the new law, subject to existing conditions.
- Unutilised Minimum Alternate Tax (MAT) or Alternate Minimum Tax (AMT) credits will also continue to remain available for set-off under the Income-tax Act, 2025.
Tax payments: Choose the correct year
The CBDT has advised taxpayers to pay close attention while making tax payments during the transition period.
For example:
- Self-assessment tax paid for FY 2025-26 should be paid against AY 2026-27, since it is governed by the Income-tax Act, 1961.
- Advance tax paid on income earned during FY 2026-27 will be governed by the Income-tax Act, 2025 and should be paid for Tax Year 2026-27.
- Selecting the wrong assessment year or tax year while making payments could result in tax credits appearing in the wrong year and create unnecessary compliance issues.
New forms, but existing PAN remains valid
The transition also brings several procedural changes.
The CBDT has introduced new PAN application forms based on different categories of applicants and replaced certain existing forms under the new Income-tax Rules, 2026.
However, taxpayers do not need to apply for a new PAN or TAN, as existing numbers remain valid.
The FAQ also notes that:
- Forms 15G and 15H have been merged into a single Form 121 under the new law.
- Form 60 has been replaced by Form 97 for specified transactions where PAN is not available.
- Applications for lower or nil TDS certificates will now be made using Form 128 under the new framework.
CBDT’s advice for taxpayers
The Board has also outlined a practical checklist for taxpayers during the transition.
It has advised taxpayers to:
- Maintain separate records for FY 2025-26 and FY 2026-27.
- Ensure the correct Assessment Year or Tax Year is selected while making tax payments.
- Reconcile tax statements separately for each period.
Keep track of the corresponding section numbers under both laws where necessary.
File returns well before the due date to avoid last-minute issues while both Acts operate simultaneously on the e-filing portal.
