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CS Professional · Advanced Direct Tax Laws and Practice · Income Tax Implication on Specified Transactions

Under section 533(4) of the Income-tax Act, 2025 (June 2027 session), which statement about retrospective effect of rules is correct?

Rules may be made retrospective only from a date not earlier than the Act's commencement, and, unless expressly or by necessary implication permitted, not so as to prejudicially affect assessees. Section 533(4) thus limits both the starting date and the harm to assessees.

  1. ARules may be given retrospective effect from a date not earlier than the commencement of the Act, but not so as to prejudicially affect assessees unless the contrary is permittedCorrect
  2. BRules may be given retrospective effect from any earlier date, including before the Act commenced
  3. CRules can never have retrospective effect
  4. DRules may prejudicially affect assessees retrospectively in all cases

Explanation

Section 533(4) allows retrospective effect only from a date not earlier than the Act's commencement. Unless the contrary is permitted expressly or by necessary implication, no retrospective effect may prejudicially affect assessees. Option B ignores the commencement limit; option C ignores the power; option D ignores the safeguard.

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