Do India's 90-Plus DTAA Notifications Survive the ITA 2025 Repeal? The Section 536(2)(b) Savings Clause, CBDT Circular 789/2000's Post-Repeal Status, Form 10F Form 41 Migration

1. The Problem: A Silent Transitional Question With Rs. 50,000 Crore in Treaty Benefits at Stake

On 1 April 2026, the Income-tax Act, 1961 stood repealed by Section 536(1) of the Income-tax Act, 2025. With 536 sections, 16 schedules, and a comprehensive savings architecture under Section 536(2), the new Act was designed to ensure seamless transition. For most domestic provisions - assessment procedures, TDS mechanics, penalty frameworks, appellate pathways - the transition has been mapped by the CBDT FAQ of 25 April 2026 and by dozens of practitioner guides. One critical dimension of the transition, however, has received virtually no analytical attention: the fate of the notifications issued under Section 90(1) of the 1961 Act that gave domestic legal force to India's 90-plus Double Taxation Avoidance Agreements.

Section 90(1) of the 1961 Act empowered the Central Government to enter into agreements with foreign countries and to give effect to such agreements 'by notification in the Official Gazette.' The Supreme Court in ASSESSING OFFICER CIRCLE (INTERNATIONAL TAXATION) 2 (2) (2) NEW DELHI Versus M/s NESTLE SA - 2023 (10) TMI 981 - Supreme Court held, in the context of MFN clauses, that such a notification is a mandatory condition precedent for a DTAA to operate in Indian domestic law - a treaty ratified at the international level but not notified under Section 90(1) has no domestic legal force. The ratio of Nestle SA, extended by the Sky High Quartet of ITAT rulings Sky High Lxxix Leasing Co. Ltd., Sky High XC Leasing Co. Ltd., Sky High LXXVIII Leasing Co. Ltd., Sky High LXXX Leasing Co. Ltd. And Sky High II Leasing Co. Ltd. Versus The ACIT (IT), Circle-4 (2) (1), Mumbai - 2025 (10) TMI 1217 - ITAT MUMBAI and companion rulings) to the MLI's Principal Purpose Test, confirms that the notification mechanism is the statutory conduit through which international treaty law becomes operative in Indian tax administration.

Now that Section 90(1) of the 1961 Act has been replaced by Section 4(1) of the ITA 2025 - a re-enactment with materially similar language but a different statutory home - the question is fundamental: do the 90-plus notifications issued under Section 90(1) of the 1961 Act automatically continue as notifications under Section 4(1) of the ITA 2025? Or does the repeal of the 1961 Act, even with the Section 536(2) savings clause, require fresh notifications under the new Act before India's DTAAs are enforceable in domestic proceedings? This article addresses this question and five subsidiary transitional issues that flow from it.

2. Statutory Architecture - Section 90(1) of the 1961 Act vs Section 4(1) of the ITA 2025

Section 90(1) of the 1961 Act provided that the Central Government 'may enter into an agreement with the Government of any country outside India or specified territory outside India ... for the granting of relief in respect of ... income on which have been paid both income-tax under this Act and income-tax in that country' and, critically, may 'by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.' The notification mechanism was both the instrument by which a treaty entered Indian domestic law and the source of the Assessing Officer's authority to apply treaty rates and exemptions.

Section 4(1) of the ITA 2025, titled 'Agreements with foreign countries or specified territories,' replicates this architecture. The Central Government 'may enter into an agreement with the Government of any country outside India or specified territory' and 'may, by notification, make such provisions as may be necessary for implementing the agreement.' The language is substantively identical. The critical structural question is whether the continuity of the 'agreement' (i.e., the DTAA itself, an international instrument) also carries the continuity of the domestic 'notification' issued under the prior statute's implementation provision.

The answer turns on Section 536(2)(b) of the ITA 2025, which provides that 'all rights, privileges, obligations, and liabilities acquired, accrued, or incurred under the repealed Act' shall be preserved. The question is whether a DTAA notification issued under Section 90(1) of the 1961 Act created a 'right' or 'privilege' under the repealed Act that is preserved by Section 536(2)(b) - or whether the notification was merely a procedural instrument that dies with the repeal of its enabling provision.

3. The Nestle SA Principle - Why the Notification Question Matters

The Supreme Court in ASSESSING OFFICER CIRCLE (INTERNATIONAL TAXATION) 2 (2) (2) NEW DELHI Versus M/s NESTLE SA - 2023 (10) TMI 981 - Supreme Court held that a DTAA provision (specifically, an MFN clause in a protocol) cannot operate in Indian domestic tax proceedings unless a specific notification under Section 90(1) has been issued to give it domestic legal force. The ratio was stated in broad terms: treaty provisions become enforceable in India through the notification mechanism; the treaty itself - ratified at the executive level through deposit of instruments - does not automatically constitute a notification. As the Supreme Court noted, the notification under Section 90(1) is the 'mandatory condition' for domestic enforceability.

The Sky High Lxxix Leasing Co. Ltd., Sky High XC Leasing Co. Ltd., Sky High LXXVIII Leasing Co. Ltd., Sky High LXXX Leasing Co. Ltd. And Sky High II Leasing Co. Ltd. Versus The ACIT (IT), Circle-4 (2) (1), Mumbai - 2025 (10) TMI 1217 - ITAT MUMBAI and connected rulings on Kosi Aviation, Sunflower Aircraft Leasing, and Sky High Appeal XLIII) extended this ratio to the MLI's PPT - holding that the MLI, ratified in 2019 and effective from 1 October 2019, has no domestic legal force because no DTAA-specific notifications were issued incorporating the MLI modifications. The India's Ratification Notification (S.O. 2887(E) dated 09.08.2019) merely recorded India's ratification; it did not reconstitute each Covered Tax Agreement to embed the MLI modifications.

Applying this principle to the ITA 2025 transition: if the DTAA notification under the old Section 90(1) is not carried forward by Section 536(2)(b), then by strict application of the Nestle SA ratio, India's DTAAs would require fresh notifications under Section 4(1) of the ITA 2025 before they are enforceable in domestic proceedings for Tax Year 2026-27 onwards. This is not merely theoretical - it is the logical extension of a principle the Supreme Court established in a closely analogous context, deployed by the same Revenue apparatus that will conduct Tax Year 2026-27 assessments.

4. The Section 536(2)(b) Analysis - Does the Savings Clause Carry Forward Notifications?

4.1 The 'Rights and Privileges' Argument

Section 536(2)(b) preserves 'all rights, privileges, obligations, and liabilities acquired, accrued, or incurred under the repealed Act.' A strong argument holds that a non-resident's right to treaty benefits - reduced withholding rates, PE protections, FTS/royalty characterisation - constitutes a 'right or privilege acquired under the repealed Act' within Section 536(2)(b). However, the Nestle SA formulation creates a circular logic problem: Nestle SA held that the notification is the instrument that creates the right; without the notification, there is no right. If the notification is the source of the right, Section 536(2)(b)'s preservation of rights cannot independently preserve the notification - the notification must be independently preserved, not derived from the rights it creates.

4.2 The General Clauses ActSection 8 Argument - The Stronger Path

Section 536(4) of the ITA 2025 applies the General Clauses Act, 1897 to the transition. Section 8 of the General Clauses Act provides that where a Central Act repeals and re-enacts a provision, 'any notification made under the repealed enactment shall, so far as it is not inconsistent with the provisions re-enacted, be deemed to have been made under the corresponding provisions so re-enacted.' Since Section 4(1) of the ITA 2025 re-enacts Section 90(1) of the 1961 Act for the identical purpose of implementing DTAA agreements in domestic law, every Section 90(1) notification is 'deemed to have been made' under Section 4(1) automatically. This is the stronger argument and is the basis on which practitioners should primarily rely pending CBDT clarification.

4.3 The Lingering Doubt - Why a CBDT Clarification is Still Needed

Notwithstanding the General Clauses Act argument, a residual doubt remains. The Nestle SA ratio's explicit requirement of a 'mandatory' notification under the domestic implementation provision creates a fact-specific inquiry: is the General Clauses Act's deemed-notification sufficient to satisfy the Nestle SA mandatory-notification requirement? Or does Nestle SA demand a notification specifically identifying the implementing provision of the Act in force at the time of assessment? A Revenue officer applying Nestle SA strictly could argue that a notification issued under Section 90(1) of the repealed 1961 Act cannot constitute a valid notification under Section 4(1) of the 2025 Act - requiring the Central Government to issue fresh notifications before treaty benefits are available in Tax Year 2026-27 proceedings.

This is not fanciful litigation risk. The practical stakes are enormous: if fresh notifications are required and not issued, India's entire treaty network becomes unenforceable domestically for Tax Year 2026-27 - a constitutional absurdity no court would endorse, but one that creates immediate compliance uncertainty for tens of thousands of cross-border transactions. The CBDT must close this gap proactively, not wait for Revenue officers to raise it in assessment proceedings.

5. The Five Transitional DTAA Questions Nobody Has Asked

5.1 Does CBDT Circular 789/2000 Survive the ITA 2025 Transition?

CBDT Circular No. 789 of 2000 dated 13 April 2000, which treated TRC-holders under the India-Mauritius DTAA as conclusively entitled to treaty benefits for capital gains, was the cornerstone of Mauritius-routed investment for two decades. The Supreme Court in Tiger Global [Civil Appeal Nos. 262-264 of 2026, decided 15 January 2026] held that the circular does not override the statutory GAAR framework and is not conclusive against a Revenue challenge to treaty access based on lack of commercial substance. The ITA 2025 transition adds a second vulnerability: does Circular 789/2000, issued under the 1961 Act's Section 119 power, survive as a circular issued under the ITA 2025's corresponding Section 153? By the General Clauses ActSection 8, yes - but a Revenue officer seeking to deny Mauritius treaty benefits post-April 2026 could combine the Tiger Global ratio with the transitional argument to challenge its continued force. A CBDT Circular expressly reaffirming Circular 789/2000's continued validity under the ITA 2025 framework would close this vulnerability.

5.2 What is the Status of Pre-1 April 2026 Form 10F Declarations for Post-April Assessments?

Under the 1961 Act, non-residents claiming DTAA benefits were required to furnish Form 10F under Rule 21AB. The ITA 2025, from 1 April 2026, requires Form 41 under Section 7(4) and the new Income-tax Rules 2026. TaxScan reported on the Form 10FForm 41 migration (2 weeks ago) at the compliance level. The unaddressed question is: where a non-resident furnished a valid Form 10F for Tax Year 2025-26 (under the 1961 Act) and is assessed for that year after 1 April 2026, does the pre-migration Form 10F satisfy the documentation requirement? Or must a fresh Form 41 be furnished for all assessments conducted under the ITA 2025 framework, even for prior years? Given that Section 536(2)(c) continues prior-year assessments under the 1961 Act, Form 10F should suffice for those assessments - but a CBDT Circular should confirm this expressly to prevent field-level disputes.

5.3 The MLI Notification Gap - Doubled Under ITA 2025

The Sky High Quartet established that the MLI's PPT modifications have no domestic legal force under the 1961 Act because no DTAA-specific Section 90(1) notifications were issued. Under the ITA 2025, this gap is compounded: not only are there no DTAA-specific Section 90(1) notifications for the MLI modifications, but the enabling provision itself has changed from Section 90(1) to Section 4(1). A Revenue officer seeking to apply the MLI's PPT in a Tax Year 2026-27 assessment faces a two-level notification deficiency - neither the MLI modification nor the new implementing provision has been notified. The CBDT should urgently issue Section 4(1) notifications incorporating MLI modifications for each Covered Tax Agreement, using synthesised texts consistent with international best practice.

5.4 The Section 90(3) 'Notification for Interpretation' - Survived or Lapsed?

Section 90(3) of the 1961 Act empowered the Central Government to issue notifications defining terms used in DTAAs for purposes of Indian domestic application. CBDT Notification No. 91 of 2008 (interpreting 'may be taxed' clauses) and the 2022 MFN-related notifications were issued under this power. The corresponding provision in the ITA 2025 is Section 4(3). By the General Clauses Act, these notifications should survive - but their continued force should be expressly confirmed by the CBDT to avoid the same notification-deficiency argument that succeeded (partially) in the Sky High cases.

5.5 The MAP Competent Authority Designation - Does Section 533 Require Re-designation?

India's DTAAs designate the 'Competent Authority' for Mutual Agreement Procedure purposes as the Central Government or a person authorised by the Central Government. Under the 1961 Act, the CBDT had designated the Joint Secretary (FT&TR), Ministry of Finance as the Competent Authority. Section 533 of the ITA 2025 re-enacts MAP provisions. Under the new Act's Rule 121 and Form 55 framework, the Competent Authority's designation should be re-confirmed through a Section 533-specific notification or circular. Absent this, a MAP applicant under the ITA 2025 framework faces procedural uncertainty about which officer to approach.

6. A Four-Point CBDT Action Plan

To resolve the transitional uncertainty and prevent the litigation risk identified in this article, the following four-point action plan is proposed:

(i) Issue a Comprehensive Transitional Circular Under Section 153 of the ITA 2025: The Circular should confirm that (a) all notifications issued under Section 90(1) of the 1961 Act are deemed to be notifications under Section 4(1) of the ITA 2025 by virtue of Section 536(4) read with Section 8 of the General Clauses Act; (b) CBDT Circular 789/2000 continues to operate as a circular under the ITA 2025 framework, subject to the Tiger Global ratio; (c) Form 10F filed under the 1961 Act suffices for assessments conducted under the 1961 Act pursuant to Section 536(2)(c), even if assessment orders are passed after 1 April 2026; and (d) Form 41 under the ITA 2025 is mandatory for Tax Year 2026-27 and onwards.

(ii) Issue Section 4(1) Notifications Incorporating MLI Modifications as Synthesised Texts: The CBDT should urgently publish synthesised texts for each of India's Covered Tax Agreements, incorporating the matched MLI modifications, notified under Section 4(1) of the ITA 2025. This would simultaneously resolve the Sky High notification deficiency for the new Act and convert the MLI's PPT from a dead letter into an operative domestic provision, as the CBDT intended when India ratified the MLI in 2019.

(iii) Re-confirm the Competent Authority Designation Under Section 533: Issue a notification under Section 533 of the ITA 2025 confirming the designation of the Competent Authority for MAP purposes, the procedure for Form 55 applications, and the interaction between MAP proceedings and domestic appellate proceedings under the ITA 2025 framework.

(iv) Issue a Comprehensive DTAA Compliance Guide for Tax Year 2026-27: Publish a practitioner-facing guide confirming the documentation requirements for claiming DTAA benefits in Tax Year 2026-27 proceedings - specifically addressing Form 41 timing, TRC requirements, and the interaction between DTAA claims and GAAR scrutiny under Section 150 of the ITA 2025 (the new GAAR provision).

7. The Practitioner's Framework - Navigating the Transitional Uncertainty

For non-residents and their Indian counterparties navigating the ITA 2025 transition in cross-border transactions, the following five-step framework provides operational guidance pending CBDT clarification:

(i) Rely on General Clauses ActSection 8 as the Primary Comfort: Until the CBDT issues its transitional circular, take the position that Section 90(1) notifications are deemed carried forward as Section 4(1) notifications under ITA 2025 by operation of Section 8 of the General Clauses Act read with Section 536(4). Document this position in writing.

(ii) Comply with Form 41 Requirements from 1 April 2026: For Tax Year 2026-27 transactions, ensure Form 41 (the replacement for Form 10F under the ITA 2025) is filed promptly. The ITA 2025's enhanced documentation requirements - including beneficial ownership declarations and transaction-specific disclosures - are more demanding than Form 10F. Early compliance avoids later disputes.

(iii) Re-examine Structures Relying on Circular 789/2000: In light of Tiger Global [2026] and the additional ITA 2025 transitional vulnerability, Mauritius-routed investment structures should re-examine the substantive commercial activity maintained in Mauritius and the adequacy of their TRC plus beneficial-ownership documentation package.

(iv) For MAP Applications: Use Form 55 under Rule 121 of the Draft Income-tax Rules 2026 for new MAP applications relating to Tax Year 2026-27 onwards. For MAP applications relating to prior years (assessed under the 1961 Act), continue to use Form 34F under Rule 44G of the 1961 Act's Rules by virtue of Section 536(2)(c).

(v) Watch for CBDT's Section 4(1) Notifications on MLI: If the CBDT issues fresh Section 4(1) notifications incorporating MLI modifications (as this article urges), the Sky High deficiency will be prospectively cured for Tax Year 2026-27 onwards. Existing structures should be reviewed against the PPT at that point.

8. Conclusion - A Transitional Gap the CBDT Must Close

The ITA 2025 transition has produced one genuinely unaddressed international tax problem: the status of the 90-plus DTAA notifications issued under Section 90(1) of the 1961 Act. The General Clauses Act'sSection 8 deeming provides the strongest argument for automatic continuity - this article's conclusion is that Section 90(1) notifications survive the ITA 2025 repeal and are deemed to operate as Section 4(1) notifications. But the Nestle SA ratio's insistence on mandatory notification as the condition precedent for domestic treaty enforceability, combined with the absence of any CBDT clarification, creates real litigation risk. The Sky High cases demonstrated that once the notification question is raised, the Revenue deploys it aggressively and courts engage with it seriously.

The five transitional DTAA questions in Section 5 - Circular 789/2000's survival, Form 10F vs Form 41 applicability, the doubled MLI gap, Section 90(3) notification continuity, and MAP Competent Authority re-designation - compound the central uncertainty. Together they constitute a transitional international tax agenda demanding urgent CBDT attention. The four-point action plan in Section 6, particularly the transitional circular and Section 4(1) MLI synthesised-text notifications, represents the minimum response. Without it, the ITA 2025's simplification mission will have introduced a silent but serious vulnerability in India's treaty enforcement architecture.

For practitioners, the General Clauses Act comfort is real but not iron-clad. The five-step framework in Section 7 provides a practical bridge. For the CBDT, the window to resolve this uncertainty is narrow - Tax Year 2026-27 assessments will begin soon, and the first cross-border dispute in which the notification question is raised will set a precedent that is far harder to correct than a proactive transitional circular issued now. The CBDT acted swiftly on the ITA 2025 FAQ for domestic provisions. It must act equally swiftly on the international tax transitional architecture.