CBDT Says Old Tax Approvals, Lower TDS Certificates Will Stay Valid Under New Income Tax Act

The shift to the Income Tax Act, 2025 will not wipe out approvals, registrations or lower tax deduction certificates already granted under the earlier law, the Central Board of Direct Taxes (CBDT) has clarified.

The clarification comes as taxpayers, charitable institutions and businesses adjust to the new law, which replaced the Income-tax Act, 1961 from April 1, 2026. A key concern was whether approvals taken under the old Act would have to be renewed or applied for again. The CBDT has now indicated that the transition itself will not disturb such benefits.

The clarification covers nil and lower Tax Deducted at Source (TDS) certificates, approvals and registrations granted to trusts and institutions, and applications that were filed before March 31, 2026 but were still pending when the new Act came into force.

Lower TDS Certificates Protected

For taxpayers who had obtained a lower or nil TDS certificate before March 31, 2026, the certificate will remain protected. It will not become invalid simply because the Income Tax Act, 2025 has come into operation.

This is useful in cases where TDS is being deducted, but the taxpayer’s final tax bill is likely to be lower than the amount being cut. A lower or nil deduction certificate helps avoid excess deduction and a later refund wait, according to a recent report by The Economic Times.

The CBDT has also clarified the position for applications that were filed under Section 197 of the 1961 Act before March 31, 2026 and remained pending on April 1, 2026. If the certificate is being sought for tax year 2026-27 onwards, the application may be treated as one made under the corresponding provision of the new Act.

In practical terms, the taxpayer need not file the application again only because the law has changed. But if the tax department asks for additional papers or clarification, the taxpayer will still have to respond.

Relief For Trusts And Institutions

The clarification also brings comfort to trusts, charitable institutions and donors. Registrations or approvals already granted under provisions such as Section 12AB or Section 80G of the 1961 Act will continue to remain valid.

These provisions are important because they decide the tax status of charitable institutions and, in some cases, the deduction available to donors. If such approvals had already been granted, they will not lapse merely due to the new legislation.

For pending applications, the tax year will matter. If the application relates to an earlier period, the old Act may continue to apply. For approvals linked to tax year 2026-27 and beyond, the application may be taken up under the relevant clause of the new Act.

What Taxpayers Should Check

The immediate message is that taxpayers do not need to panic or rush to reapply for approvals already granted. The transition provisions are meant to preserve continuity.

Still, records should be kept carefully. The application date, approval date, relevant tax year, and any notice from the department will show whether the old Act or the new Act applies.

From April 1, 2026, such applications will be considered under the Income Tax Act, 2025.

FAQs

1. Will old tax approvals become invalid under the Income Tax Act, 2025?

No. Existing approvals, registrations, and lower or nil TDS certificates will continue to remain valid after the new Act comes into effect.

2. Do taxpayers need to apply again for lower or nil TDS certificates?

Not if the application was already filed before March 31, 2026. Pending applications may be considered under the matching provision of the new Act.

3. What should taxpayers and trusts check now?

They should keep records of the application date, approval date, tax year, and any notice from the tax department to know which law applies.