The Income-tax Act, 2025 began on 1 April 2026, but that does not move every earlier property-income year into the new law. Section 536 preserves the Income-tax Act, 1961 for proceedings about a tax year that began before 1 April 2026, including proceedings started after the new Act took effect. The relevant boundary is the tax year being dealt with, not simply the date a return or notice is handled.
The transition follows the tax year
Section 536(2)(c) of the Income-tax Act, 2025, as amended by the Finance Act, 2026 says the repealed 1961 Act continues to apply to proceedings pending when the new Act began and to proceedings initiated later in respect of any tax year beginning before 1 April 2026. That includes assessments and related proceedings named in the provision.
For a homeowner dealing with income from the year 1 April 2025 to 31 March 2026, the start date falls before the transition. A later filing, assessment or notice does not by itself change which Act applies to that earlier tax year. The dates and the person’s specific circumstances still matter, so this is a guide to the transition rule, not a calculation of tax payable.
Why this is a transition question
The Central Board of Direct Taxes announced that the new Act came into force on 1 April 2026. Its press release described the change as a clearer, reorganised framework “without altering the underlying tax policy.” Read the CBDT commencement release.
For property owners, the immediate practical risk is mixing up a new section number with an older tax year. The 2025 Act groups income from house property in sections 20 to 22. Those references are useful for tax years governed by the new Act; they should not be copied mechanically into a document about an earlier year governed by the saved 1961 Act.
A short file check before using a section number
First, identify the period in which the rent or other house-property income arose. Then check the tax-year start date and whether the matter is a return, an assessment or another proceeding. Finally, match the law and section reference to that period before relying on a form, notice or adviser’s note.
This distinction is separate from municipal property tax, which is levied by a local body. BestProp.ai has also explained the narrow two-year annual-value rule for builder inventory under section 21(5); that specific provision does not replace the year-by-year transition test.
Which Act applies to income from a tax year before 1 April 2026?
Section 536 says the repealed Income-tax Act, 1961 continues to apply to proceedings relating to a tax year beginning before that date. The provision covers both pending proceedings and specified proceedings begun later.
Does the new Act create a new house-property tax benefit?
The CBDT’s commencement release said the underlying tax policy was not changed by the new Act’s start. A taxpayer’s eligibility and final treatment still depend on the applicable law, regime and individual facts.
Source and limitation: This explanation is based on the consolidated Income-tax Act, 2025 text and CBDT’s commencement release. It does not replace tax advice about a particular return, property or proceeding.