Last verified: May 2026<\/p>\n
On 8 August 2025, the Finance Minister rose on the floor of the Lok Sabha and did something unusual. She withdrew the Income-tax Bill, 2025<\/a>. The bill had been introduced just 176 days earlier, on 13 February. The Income-tax Act, 1961<\/a> was already six decades old by then. Its successor, on the order paper that morning, was being pulled before a single vote.<\/p>\n What had happened in those 176 days reshaped how every Indian lawyer would read the new Income-tax Act, 2025 from 1 April 2026 onwards. The bill had been referred to a Select Committee chaired by the Member of Parliament from Kendrapara, who later filed a 4,000-page report<\/a>. On 21 July, that report landed in Parliament with 285 recommendations. Of those, 32 were flagged as significant, 84 were substantive, and 201 were drafting corrections.<\/p>\n The withdrawal was a signal. The government wasn’t going to amend on the floor. It was going to re-table.<\/p>\n What came next was a 13-day legislative blitz that direct-tax practitioners are still talking about. On 11 August, the revised Income-tax (No. 2) Bill, 2025<\/a> was introduced and passed by the Lok Sabha on the same day. The Rajya Sabha cleared it on 12 August. Presidential assent followed on 21 August<\/a>. From withdrawal to law: thirteen days. For comparison, the 1961 Act took close to two years through Parliament.<\/p>\n So what does a 13-day parliamentary cycle do to a 600-page replacement of India’s oldest direct-tax statute? It leaves drafting tension. It elevates the Select Committee Report from one interpretive aid among many to a primary record of legislative intent. And it means TY 2026-27, the first tax year fully under the new Act, will be where the 84 substantive Select Committee changes get tested in litigation.<\/p>\n For litigators, that’s opportunity. For in-house counsel, that’s risk. For every lawyer with a pending notice, an open appeal, or a charitable trust on their books, it’s a transition you can’t outsource to your CA. The dual-Act period that opened on 1 April 2026 isn’t a clean break. It’s an extended overlap, governed by Section 536 of the new Act<\/a> and Section 6 of the General Clauses Act, 1897<\/a>. Reading that overlap correctly is the first work of every Indian tax lawyer this year.<\/p>\n Here’s the short version, the one you can quote in a board meeting:<\/p>\n The Income-tax Act, 2025 governs all income earned from 1 April 2026 onwards, replacing the Income-tax Act, 1961 after 65 years. Section 536 of the new Act preserves rights, pending proceedings, and elections under the old Act, so AY 2025-26 returns, pending appeals, and earlier-year reassessment notices remain governed by the 1961 Act through their natural conclusion.<\/p>\n\n What follows is a working transition guide built for lawyers handling Indian direct-tax matters in TY 2026-27. It covers the structural changes, the Section 536 mechanics, case-law continuity, the procedural transition for litigators, the dual-Act period workflow, and the litigation lanes you should be tracking.<\/p>\n\n
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