Presidential Assent Granted to Revised Income Tax (No. 2) Bill 2025 and The Taxation Laws (Amendment) Bill 2025

In a significant move to simplify the complex language of the Income Tax Act of 1961 (ITA 1961) and eliminate redundant provisions without altering policy, the Income Tax Bill 2025 (ITB 2025) was initially tabled in the Lok Sabha on 13 February 2025^[1] . On the same day, a Parliamentary Select Committee (PSC) was formed to review the ITB 2025.

The PSC submitted a detailed report on 16 July 2025, exceeding 4,500 pages and including its recommendations as well as an amended version of the ITB 2025 which was presented to the Lok Sabha on 21 July 2025^[2] .

The Government of India (GoI) accepted most of the PSC’s recommendations, along with feedback from other stakeholders – intended to convey the correct legislative meaning. This process necessitated corrections in drafting, phrase alignment, consequential changes and cross-referencing. To avoid confusion arising from multiple versions of the ITB 2025, the GoI withdrew the ITB 2025 from the Lok Sabha with an intent to replace it with a fresh bill (Revised ITB 2025), providing a clear and updated version with all changes incorporated. Consequently, the GoI tabled the Revised ITB 2025 before the Lok Sabha on 11 August 2025, which was approved by Lok Sabha on the same day. The Rajya Sabha also approved it on 12 August 2025. In parallel, the GoI introduced The Taxation Laws (Amendment) Bill 2025 (Amendment Bill) to implement specific changes to the ITA 1961, which received approval from both the Lok Sabha and Rajya Sabha. Notably, the Revised ITB 2025 incorporated all changes introduced by the Amendment Bill^[3] .

As of 21 August 2025, both the Revised ITB 2025 and the Amendment Bill have received Presidential Assent and are, hence, enacted. The respective Acts will be published in the Official Gazette, with the Revised ITB 2025 effective from 1 April 2026, thereby replacing the Income Tax Act of 1961. Meanwhile, The Taxation Laws (Amendment) Act 2025 will take effect from 1 April 2025 or earlier.

Although the Revised ITB 2025 predominantly continues the policy of ITA 1961 in a simplified language, businesses may need to consider the new provisions to ensure compliance by making necessary modifications in their systems and processes before 1 April 2026. Additionally, stakeholders may consider continuous engagement with the government to help shape future provisions, aimed at minimizing disputes and compliance challenges, as well as addressing any remaining gaps, in the upcoming Budget exercise. Concurrently, the Government is reviewing the income tax rules and forms to align them with the new law and stakeholders may also wish to provide their inputs in this respect.

^[1] Refer EY Tax alert dated 14 February 2025 titled New Income Tax Bill 2025: March towards simplification

^[2] Refer EY Tax Alert dated 24 July 2025 titled Parliamentary Select Committee’s Report on the Income Tax Bill 2025 to closely align it with the Income Tax Act, 1961

^[3] Refer EY Tax alert dated 16 August 2025 titled Revised Income tax (No.2) Bill 2025 and The Taxation Laws (Amendment) Bill 2025 approved by Parliament