What Financial Reforms India Is Eyeing Ahead of the Monsoon Session 2025

The Monsoon Session of Parliament is scheduled to be convened between July 21 and August 21. The session is poised to advance several major economic and policy bills, as per reports, which are centred around boosting investment, updating financial laws, and strengthening consumer protections.

Here is an overview of the major bills to be introduced or taken up throughout the session along with the key changes and amendments they seek.

Income Tax Bill, 2025

The noteworthy proposal is to overhaul India's income tax law through the Income Tax Bill, 2025, which intends to replace the country's 60-year-old Income Tax Act of 1961. The primary objective behind the new I-T Bill is to make tax laws crisp, clear and easier to understand. To streamline the law, the new bill reduces the number of pages from 823 to 622, removing redundant provisions and explanations.

The bill has proposed to replace 'assessment year' with 'tax year.' The new tax bill also consolidated all the provisions about salary in one place for ease of understanding so that the taxpayers do not have to refer to separate chapters for filing their return of income. The bill also classified virtual digital assets, which include cryptocurrencies, as assets under the tax regime. Now they will be taxed along with other assets like property, jewellery and shares.

Meanwhile, businesses opting for the presumptive tax scheme (Section 44AD) will see the turnover limit raised from Rs 2 crore to Rs 3 crore. Professionals under Section 44ADA will now have a higher threshold of Rs 75 lakh, up from Rs 50 lakh.

Insurance Laws Amendment Bill, 2025

Reforming the insurance sector is another key agenda in the upcoming monsoon session. A headline change in the Insurance (Amendment) Bill, 2025 is the proposal to raise the foreign direct investment (FDI) limit in insurance companies from 74% to 100%, essentially allowing full foreign ownership of insurers in India.

"This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified," Finance Minister Nirmala Sitharaman said during her budget speech.

The bill also proposes that agents be allowed to sell products from multiple insurers, breaking away from the existing exclusivity model.

As part of a comprehensive legislative exercise, the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act, 1999 will be amended alongside the Insurance Act, 1938.

Additionally, it bill would also lower capital barriers in certain areas: the minimum net owned funds requirement for foreign reinsurance branches may drop from ₹5,000 crore to ₹1,000 crore, and the Insurance Regulatory and Development Authority (IRDAI) would gain flexibility to set lower entry capital (as low as ₹50 crore) for niche or rural insurers to foster inclusion, The Financial Express highlighted.

Banning of Unregulated Lending Activities Bill, 2025

For consumer protection and financial stability, the government is preparing a Banning of Unregulated Lending Activities (BULA) Bill, 2025. This is a response to the surge in predatory lending practices, especially via digital loan apps and illegal loan sharks that operate outside the formal banking system, a Reuters report pointed out. It seeks to declare any lending business illegal without being registered and authorised by the Reserve Bank of India (RBI) or other competent authorities. Making deceptive advertisements or false promises to lure borrowers would be a punishable offence, attracting up to 5 years' jail and ₹10 lakh fine.

Insolvency and Bankruptcy Code (Amendment) Bill, 2025

During this parliamentary session, corporate insolvency resolution is also a major focus area. The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 (IBC), will make changes to the Insolvency and Bankruptcy Code, 2016 with an objective to speed up the resolution of stressed companies as well as to recoveries for creditors.

The most distinguished provision out of all is the introduction of group insolvency, which allows for related corporate entities to be resolved together—maximising value and avoiding fragmented proceedings. The IBC also proposes a cross-border insolvency framework, based on the widely recognised UNCITRAL Model Law, enabling Indian authorities to better coordinate with international jurisdictions and help foreign creditors access assets across borders more seamlessly.

The proposed bill also introduces creditor-led pre-pack resolution—a mechanism that allows financial creditors to hammer out a rescue plan outside court and fast-track its approval, reducing procedural drag.

Special Economic Zones Reform

The commerce department is also looking to introduce the Special Economic Zone (SEZ) Amendment Bill in the monsoon session, the Business Standard reported. The bill seeks to overhaul India's SEZ framework to align with the rapidly evolving global trade landscape.

Unlike the SEZs, which were largely export-centric, these new hubs will accommodate both manufacturing and services, while offering greater operational flexibility.

The bill further proposes easing the customs burden on domestic sales by allowing firms to pay duty only on imported inputs—rather than on the entire finished product—removing a longstanding disincentive. It promises seamless approvals and single-window clearances while integrating various industrial parks under a coherent framework.

The government is said to be considering attractive tax breaks, possibly including a 15% concessional corporate tax rate for eligible new units.

These bills collectively signal a push to modernise Indian financial laws and to encourage investments. As the session unfolds next week, stakeholders will be watching closely to see how these proposals fare in Parliament and what shape they take when enacted into law setting the stage for the country’s economic and regulatory environment in the years ahead.