Step 1: Understanding the Concept
A PCR cycle has three steps: denaturation, annealing and extension.
Step 2: Role of Taq polymerase
Denaturation is done by heat and annealing is simple base pairing of primers, so no enzyme acts there.
Taq polymerase, a heat-stable enzyme from Thermus aquaticus, adds nucleotides to the primer only in the extension step.
Step 3: Conclusion
The enzyme works in primer extension only.
Final Answer:
Taq polymerase acts in primer extension only.
\[ \boxed{\text{(D) }\text{Primer extension only}} \]