The Centre withdrew the original Income-tax Bill, 2025 on 8 August 2025 to revise it after a parliamentary Select Committee review and stakeholder feedback. The government cited drafting corrections, clearer phrasing and cross-reference changes—not a stated change in tax rates—as the reason for preparing a replacement. The replacement bill went through Parliament in August 2025; today, the Income-tax Act, 2025 is in force from 1 April 2026.
Why did the Centre withdraw the Income-tax Bill?
The government said it wanted the new law to convey its intended legal meaning more accurately after considering the Select Committee’s recommendations and suggestions from stakeholders. It said the changes were mainly corrections and refinements: drafting, alignment of phrases, consequential amendments and cross-references.
Finance Minister Nirmala Sitharaman’s Statement of Objects and Reasons for the replacement bill put the decision plainly: “Therefore, a decision has been taken by the Government to withdraw the Income-tax Bill, 2025 as reported by the Select Committee.” The same statement describes the 1961 Act as having accumulated amendments over “more than sixty-four years.” The government’s stated aim in reviewing it was to make the law more concise, lucid and easier to read and understand. That explanation does not establish that the withdrawal itself changed tax rates or tax policy. Government of India, Statement of Objects and Reasons
What happened: the bill timeline
- 13 February 2025: The Income-tax Bill, 2025 was introduced in the Lok Sabha and referred to a Select Committee.
- 21 July 2025: The committee presented its report in the Lok Sabha.
- 8 August 2025: The government withdrew the original bill as reported by the committee.
- 11 August 2025: The Income-tax (No. 2) Bill, 2025 was introduced, considered and passed by the Lok Sabha.
- 12 August 2025: The Rajya Sabha returned the replacement bill.
The government said it accepted almost all of the committee’s recommendations and also considered stakeholder suggestions. The legislative record confirms the sequence from the original bill to its withdrawal and the replacement. Press Information Bureau: legislative session release; PRS Legislative Research: bill timeline
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How the withdrawn and replacement bills differ in status
| Version | What happened | Legislative status |
|---|---|---|
| Income-tax Bill, 2025, as reported by the Select Committee | Introduced on 13 February 2025, referred to a Select Committee, then withdrawn on 8 August 2025. | Withdrawn; it is not the current law. |
| Income-tax (No. 2) Bill, 2025 | Introduced and passed by the Lok Sabha on 11 August 2025; returned by the Rajya Sabha on 12 August 2025. | Replacement bill that preceded the current statute. |
| Income-tax Act, 2025 | The enacted statute that followed the replacement bill. | In force from 1 April 2026, according to the Income Tax Department. |
The stated rationale supports describing the replacement as a legislative and drafting reset. It does not, by itself, establish that every provision was unchanged between bill versions; a clause-by-clause comparison would be needed to make that claim.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is the law now?
The original Income-tax Bill, 2025 is not current law. The Income Tax Department says the Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. Transitional provisions preserve some proceedings under the old Act, and certain circulars, notifications, instructions and approvals issued under it remain valid where they do not conflict with the new Act. Income Tax Department FAQ
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