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Setting and removing labels in a transition post function would be very helpful for us to structure, monitor and handle the team's product backlog items during our Kanban process.

We are using a label as an indicator that the current process step is complete, i.e. the policies for the next step are fulfilled, so that anybody can pull the item into the next process step / status.

I'd also like this. We have various projects used for triaging. It would be helpful for labels to be applied so we can easily track their point of origin without human error after they've been moved into other projects for development.

I'd be curious about why this isn't possible.
It does work with a custom label, so the functionality itself seems to be in place already.

I'd also like to see this feature, as we need to remove the 'chargeable' label when an issue is passed back for re-triaging.

I agree and would also like to be able to remove specific labels on transitions.