Lok Sabha Passed Income Tax Bill Yesterday: Is New Income Tax Act in Force? Know Here
Being a Money Bill, the New Income Tax Act presented at Lok Sabha cannot be rejected or amended by the Rajya Sabha and it is just a matter of time for the bill to get the assent of the President of India before being enacted.
The Lok Sabha on Monday, August 11, passed two key tax legislations Income Tax the Income Tax Bill, 2025 and the Taxation Laws (Amendment) Bill, 2025 Income Tax amid opposition protests. The move is the biggest revamp of India’s direct tax framework since 1961, but no, the new Income Tax law is not in force yet. It must still complete the remaining constitutional steps before...
The Lok Sabha on Monday, August 11, passed two key tax legislations Income Tax the Income Tax Bill, 2025 and the Taxation Laws (Amendment) Bill, 2025 Income Tax amid opposition protests. The move is the biggest revamp of India’s direct tax framework since 1961, but no, the new Income Tax law is not in force yet. It must still complete the remaining constitutional steps before becoming law.
Both Bills have been introduced as Money Bills. Under Article 110, a Money Bill can only originate in the Lok Sabha. The Rajya Sabha cannot amend or reject it – it may only offer recommendations within 14 days. After this period (or earlier, if returned), the Bill is deemed passed by Parliament and is sent for the President’s assent under Article 111. Only once the President signs does it become law. Practically, this means Monday’s passage is decisive, but not the final step.
Is the new Income Tax Act already applicable?
No. Even after Presidential assent, the Income Tax Bill, 2025 is drafted to commence from April 1, 2026. In other words, it will replace the Income Tax Act, 1961 from the start of the financial year 2026–27. Until then, the 1961 Income Tax Act will continue to govern returns and assessments.
What exactly did the Lok Sabha pass?
Monday’s vote cleared a revised Income Tax Bill that incorporates many recommendations from a Select Parliamentary Committee after the government withdrew the February draft and reintroduced an updated version.
In parallel, the parliament also passed the Taxation Laws (Amendment) Bill, 2025.
In Short: Here’s What Taxpayers Need to Know
As of today (August 12, 2025): The Lok Sabha has passed the Bills. They now go through the Money Bill formality with the Rajya Sabha (recommendations-only window) and then to the President. They are not yet law until Presidential assent is given.
Effective date: Even after assent, the new Income Tax law kicks in on April 1, 2026. Your filings and compliance for FY 2024-25 and FY 2025-26 continue under the 1961 Act.
As per Mr. Vivek Jalan - Partner, Tax Connect Advisory Services LLP, “Many of the suggestions of the taxpayers, Trade & Industry have been accepted by the Baijayant Panda Select Committee. Such changes require that certain clauses/ words/ sentences/ etc are added or deleted to or from the Feb’25 Income Tax Bill. These have been accepted by The CBDT.”
He further told Taxscan that, “For example Clause 263(1)(a)(ix) of The Feb’25 Income Tax Bill 2025 required that a person seeking refunds under Chapter XX must mandatorily file Income Tax Returns within "due date". Considering this representation and that such a provision would create a hardship for all taxpayers who miss the due dates due to genuine reasons, The Ministry of Finance, while finalising the draft Income Tax Bill 2025 has appropriately deleted clause 263(1)(a)(ix) so that there is no unnecessary litigation in this matter which would have impacted all taxpayers. The New Income Tax Bill which is re-tabled today, 11th August 2025, sees that Clause (ix) is removed and the later clauses has moved up i.e. Clause (x) has become the new Clause (ix).”
“It is considered that after this, till implementation of the Income Tax Bill 2025 on 1st April 2026, no further amendments to the Act may be made. Taxpayers, Trade & Industry may thus prepare for implementation of the New Income Tax Act, 2026”, he concluded.
In parallel, Mr. Deepak Kumar Jain, Founder and CEO of TaxManager.in - the tax advisory and e-filing portal platform of Rising Advisory Services Private Limited added that “The aim to introduce New Income Tax Bill 2025 by Hon. Finance Minister Smt Nirmala Sitharaman – is to simplify tax laws which would be easier for a common man to understand and comply with. Fair measures have been taken to reduce penalties on honest tax payers committing mistakes. Many more measures have been taken to increase the clarity on deductions leading to relief to middle income group which means higher take home pay.”
Keep an eye out for the assent by the President and any rules that may be notified later on.
For now, nothing changes in your day-to-day tax obligation.
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