CBDT Office Memorandum F. No. 370149/107/2026-TPL dated 6 July 2026.

CBDT has issued an Office Memorandum dated 6 July 2026 containing FAQs on the practical application of section 536 of the Income-tax Act, 2025, dealing with repeal and savings on transition from the Income-tax Act, 1961 to the Income-tax Act, 2025.

The FAQs clarify which law will apply for pending and future proceedings, particularly where the matter relates to a period prior to 1 April 2026.

Key clarifications

The FAQs provide useful operational clarity for taxpayers, professionals and tax authorities during the transition phase. The broad principle is that matters relating to tax years prior to 1 April 2026 will generally continue under the Income-tax Act, 1961, whereas matters relating to tax year 2026-27 onwards will be governed by the Income-tax Act, 2025, subject to specific savings under section 536.

CBDT Notification No. 74/2026 dated 3 July 2026 and CBDT Notification No. 75/2026 dated 3 July 2026.

CBDT has issued Notification No. 74/2026 and Notification No. 75/2026, both dated 3 July 2026, granting relief from tax deduction at source on certain lease payments made to eligible units located in an International Financial Services Centre (IFSC).

The notifications provide that no tax shall be deducted under section 393(1) [Table S. No. 2] of the Income-tax Act, 2025 on payment of lease rent or supplemental lease rent made by a lessee to an eligible IFSC Unit lessor for lease of:

Conditions

1. The IFSC lessor must furnish a statement-cum-declaration in Form No. 1(N) to the lessee.

2. The declaration must specify the twenty consecutive tax years for which the lessor opts to claim deduction under section 147 of the Income-tax Act, 2025.

3. The lessee shall not deduct tax only after receiving the declaration from the lessor.

4. The lessee must report all such payments, on which tax has not been deducted, in the statement of tax deduction under section 397(3)(b) read with Rule 219 of the Income-tax Rules, 2026.

5. The relaxation is available only for the period declared by the lessor. For any other year, the lessee will remain liable to deduct tax.

The notifications are deemed to have come into force from 1 April 2026.

This is a beneficial clarification for IFSC-based aircraft and ship leasing structures. It removes the TDS requirement on eligible lease rentals where the lessor is claiming deduction under section 147, thereby avoiding unnecessary tax deduction and refund blockage. However, lessees should ensure that Form No. 1(N) is obtained and preserved before applying non-deduction, and that such payments are properly reported in the TDS statement.

CBDT Notification No. 80/2026 [F. No. 275/19/2026-IT(B)] dated 10 July 2026.

CBDT has issued Notification No. 80/2026 dated 10 July 2026 notifying that no tax shall be deducted on specified payments made to eligible Units of an International Financial Services Centre (IFSC), subject to prescribed conditions.

The notification is issued under section 400(1) read with section 147 of the Income-tax Act, 2025 and is deemed to have come into force from 1 April 2026.

Covered IFSC Units and receipts

conditions

1. The IFSC Unit must be registered under the relevant IFSCA regulation or circular.

2. The payee must furnish Form No. 1(N) to the payer.

3. The declaration must mention the twenty consecutive tax years for which the IFSC Unit opts to claim deduction under section 147.

4. The payer shall not deduct tax only after receipt of Form No. 1(N).

5. The payer must report such payments in the TDS statement under section 397(3)(b) read with Rule 219 of the Income-tax Rules, 2026.

6. The non-deduction benefit is available only for the declared period. For any other year, tax deduction obligation will apply as usual.

This notification significantly widens TDS relief for IFSC Units, covers several financial services receipts such as interest, dividend, professional fee, commission, brokerage, advisory fee, insurance commission and trusteeship fee. Payers should ensure that Form No. 1(N) is obtained before applying non-deduction, verify the IFSC registration status of the payee, and maintain proper documentation for reporting in the TDS statement.

CBDT Circular No. 6/2026 [F. No. 300176/3/2026-ITA-I] dated 2 July 2026.

CBDT has issued Circular No. 6/2026 dated 2 July 2026 granting relief to certain funds and institutions which could not file Form No. 10AB within the prescribed time for renewal of approval under section 80G(5) of the Income-tax Act, 1961.

Under the existing provision, a fund or institution approved under section 80G(5), whose approval was due to expire, was required to file Form No. 10AB electronically at least six months before expiry of the approval. In cases where approval was expiring on 31 March 2026, the due date for filing Form No. 10AB was 30 September 2025.

relief granted

CBDT has issued this relaxation under section 119(2)(b) of the Income-tax Act, 1961 read with section 536(2) of the Income-tax Act, 2025, considering bona fide reasons and genuine hardship faced by such institutions.

This circular only condones the delay in filing Form No. 10AB. It does not grant automatic approval under section 80G(5) of the Income-tax Act, 1961 or under section 133(1)(b) of the Income-tax Act, 2025. The application will still be examined and decided on merits.

This is a significant relief for charitable funds and institutions whose 80G approvals were expiring on 31 March 2026 and who filed Form No. 10AB belatedly but before 31 March 2026. Such entities should track their pending or rejected applications and, where rejection was only due to delayed filing, pursue disposal on merits before the jurisdictional authority.

CBDT Letter F. No. 225/56/2026/ITA-II dated 4 June 2026.

CBDT has issued guidelines vide Letter F. No. 225/56/2026/ITA-II dated 4 June 2026 prescribing parameters for compulsory selection of returns for complete scrutiny during FY 2026-27.

The guidelines apply to returns filed during FY 2025-26 and have been issued in pursuance of section 536(2)(c) of the Income-tax Act, 2025, while the scrutiny proceedings will continue under the relevant provisions of the Income-tax Act, 1961.

Cases covered for compulsory scrutiny

Procedural points

1. Notice under section 143(2) is required to be served within the prescribed time limit.

2. For returns filed during FY 2025-26, the last date for service of notice under section 143(2) is 30 June 2026.

3. In applicable cases, notices may be served through NaFAC, prescribed income-tax authority or jurisdictional Assessing Officer.

4. International Taxation and Central Charges will continue to handle selected cases within their respective charges and the NaFAC transfer process will not apply to them.

5. Cases based merely on information from AIS / SFT / NMS / CPC-TDS etc. will not automatically fall under compulsory scrutiny unless they satisfy the specific tax-evasion information parameter.