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Section 535 Income Tax Act 2025: How Are Difficulties Removed?

Section 535, titled Removal of difficulties, provides a limited transitional mechanism allowing the Central Government to resolve practical difficulties in implementing the Income-tax Act, 2025.

Applicable statute: Income-tax Act, 2025 (Act 30 of 2025), effective 1 April 2026. Section 535 must be read with Section 536 on repeal and savings and with any validly issued orders.

What is the purpose of Section 535?

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 with effect from 1 April 2026. The transition may produce administrative or interpretative difficulties, especially when older assessments and proceedings interact with the new statutory framework. Section 535 empowers the Central Government to address difficulties in giving effect to the new Act through an appropriate general or special order.

This is a power to remove implementation difficulties, not a general authority to disregard the Act, impose a new tax, or override express statutory protections. The text itself requires every such order to remain consistent with the Act.

Section 535 explained subsection by subsection

Section 535(1): General or special orders

Where a difficulty arises in giving effect to provisions of the Income-tax Act, 2025, the Central Government may make a general or special order doing what appears necessary or expedient to remove that difficulty. The express qualification is that the order must be not inconsistent with the provisions of the Act.

Section 535(2): Transition involving the Income-tax Act, 1961

Without limiting subsection (1), the Government may specify adaptations or modifications subject to which the Income-tax Act, 1961 applies to assessments for the tax year ending 31 March 2026 or an earlier tax year. This provision specifically addresses the overlap between the old and new regimes.

Its wording should be read alongside Section 536 (Repeal and savings), which governs the continued operation of the earlier law for relevant matters.

Section 535(3): Three-year sunset period

No order under subsection (1) can be made after the expiration of three years from 1 April 2026. The power to issue new removal-of-difficulty orders is therefore time-limited; the provision does not establish an indefinite delegated power.

Section 535(4): Parliamentary laying requirement

Every order made under Section 535 must be laid before each House of Parliament as soon as may be after it is made. This creates a statutory transparency and parliamentary oversight requirement.

Relevant statutory terms and legal concepts

Central Government: The Union Government exercising the specific authority conferred by Section 535. The provision does not confer the same power directly on individual assessing officers.
General order: An order framed to address an implementation difficulty of general application, rather than one confined to a particular situation.
Special order: An order directed at a specified class, situation or transitional issue, within the limits of Section 535.
Removal of difficulties: A transitional legislative mechanism to address problems in putting statutory provisions into effect, subject to the express requirement of consistency with the Act.
Tax year: The period used under the Income-tax Act, 2025 for computing and assessing income. Section 535(2) specifically identifies the tax year ending on 31 March 2026 and earlier tax years.
Assessment: Under Section 2(13) of the Income-tax Act, 2025, assessment includes reassessment and recomputation.

What are the legal limits on the power?

  • Actual implementation difficulty: The power is engaged when a difficulty arises in giving effect to the Act.
  • Consistency with the Act: An order cannot contradict an express statutory provision.
  • Specified transitional scope: Subsection (2) particularly concerns how the 1961 Act applies to older assessment years.
  • Time restriction: New orders under subsection (1) cannot be issued beyond the statutory three-year period.
  • Parliamentary oversight: Every order must be laid before both Houses of Parliament.
Important: Section 535 does not automatically suspend assessment proceedings, extend limitation periods or grant an exemption. The legal effect of any particular order depends on its wording and consistency with the Act.

Practical illustrations

Example 1: Transitional assessment procedure

Suppose a practical difficulty arises over applying an administrative procedure under the 1961 Act to an assessment relating to a tax year ending before 1 April 2026. Subject to the statutory limits, a Section 535 order may provide an appropriate adaptation to facilitate implementation.

Example 2: Inconsistent proposed order

Suppose an order purports to remove a taxpayer protection expressly provided by the 2025 Act. Because Section 535(1) requires consistency with the Act, such an order cannot be justified merely by describing it as a removal-of-difficulties measure.

Example 3: Order issued outside the permitted period

Suppose a new order is proposed after the three-year period specified in Section 535(3). Section 535 cannot serve as the authority for making that new order beyond the statutory deadline.

Relationship with the Income-tax Act, 1961

The earlier Section 298 of the Income-tax Act, 1961 addressed the power to remove difficulties. Section 535 of the 2025 Act performs a similar transitional function, but its precise scope, reference dates and limits must be determined from its own text.

How should taxpayers and practitioners use Section 535?

When relying on a removal-of-difficulties order, identify its issuing authority, date, scope and precise language. Check whether it applies to the relevant tax year and proceeding, whether it is consistent with the Act and whether the required parliamentary laying procedure applies. Do not assume that an administrative circular is itself an order under Section 535.

Frequently asked questions

What is Section 535 of the Income-tax Act, 2025?

It permits the Central Government to make general or special orders to remove difficulties in giving effect to the Act, provided the orders are not inconsistent with its provisions.

Can the Central Government amend the Act through Section 535?

No. The power is limited to removing implementation difficulties through orders consistent with the Act. It is not an unrestricted power to rewrite substantive provisions.

Can Section 535 orders address older tax years?

Yes. Subsection (2) specifically permits adaptations or modifications governing the application of the Income-tax Act, 1961 to assessments for the tax year ending 31 March 2026 or an earlier tax year.

What is the deadline for orders under Section 535?

No order under subsection (1) may be made after the expiration of three years from 1 April 2026.

Must orders be placed before Parliament?

Yes. Every order made under Section 535 must be laid, as soon as may be, before each House of Parliament.

Conclusion

Section 535 provides a carefully limited means of managing the transition to the Income-tax Act, 2025. Its safeguards are central: the Government must act consistently with the statute, within the specified three-year period, and subject to parliamentary laying of every order.

Official statutory source

Read the Income-tax Act, 2025, as amended by the Finance Act, 2026 (official Income Tax Department PDF), particularly Sections 535 and 536.

Last reviewed: 12 November 2026. This article is general legal information, not a substitute for examination of a specific order, proceeding or legal advice.