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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, which statement on retrospective effect of rules is correct?

Rules may operate retrospectively, but only from a date not earlier than the Act's commencement. They cannot prejudicially affect assessees' interests unless the contrary is permitted expressly or by necessary implication, so the power is limited in both date and effect.

  1. ARules may be given retrospective effect from a date not earlier than the Act's commencement, but not so as to prejudicially affect assessees unless the contrary is permitted expressly or by necessary implicationCorrect
  2. BRules may be given retrospective effect from any date, including before the Act's commencement, in all cases
  3. CRules can never have retrospective effect
  4. DRules may prejudicially affect assessees retrospectively without any restriction if the Board so notifies

Explanation

Section 533(4) allows retrospective effect only from a date not earlier than the commencement of the Act. Prejudice to assessees is barred unless the contrary is permitted expressly or by necessary implication. Hence the options allowing any earlier date, or a total ban, or unrestricted prejudice, are wrong.

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