ISC Explained: The 2026 Monsoon Session of the Indian Parliament (Part 2)

The Monsoon Session is one of the three annual periods when the Parliament of India meets to discuss national issues, question the government, and pass new laws. It takes its name from the rainy season because it traditionally happens every year between July and August.

The 2026 Monsoon Session recently concluded on August 13, 2026, after running for 25 days with 19 official working days.

Basic Rules of the Monsoon Session

The Indian Parliament must meet at least twice a year, and the gap between two sessions cannot be more than six months. The Ministry of Parliamentary Affairs manages the schedule, which involves:

The Lok Sabha: The lower house of Parliament where the public elects members.
The Rajya Sabha: The upper house where members represent India’s states.
Passing Bills: The main job is to turn proposed ideas (Bills) into official national laws.

Kerala (Alteration of Name) Bill, 2026

The Kerala (Alteration of Name) Bill, 2026 is a landmark piece of legislation passed by the Indian Parliament to officially change the name of the state of Kerala to “Keralam”. Introduced during the Monsoon Session of Parliament, the Bill successfully passed the Lok Sabha on 11 August 2026 and the Rajya Sabha on 12 August 2026. It subsequently received the official assent of President Droupadi Murmu, completing a historic transition that aligns the state’s constitutional nomenclature with its local linguistic, historical, and cultural reality.

Key Provisions of the Bill:

The Bill contains structural adjustments to ensure a seamless legislative transition. The primary statutory mandates include:

Constitutional Amendments: The Act officially substitutes the word “Kerala” with “Keralam” across vital constitutional sections. This includes Entry 5 under the First Schedule (which lists the states of India) and Entry 9 under the Fourth Schedule (allocating Rajya Sabha seats).
Consequential Modifications: It amends specific clauses, including Article 31A and Article 290A (dealing with the Consolidated Fund payments to the Travancore Devaswom Board), ensuring all institutional financial frameworks mirror the updated name.
Adaptation of Laws: The appropriate central and state authorities are granted a legal window of one year from the “appointed day” to adapt, modify, or amend all preexisting local rules, notifications, and central statutes to avoid administrative confusion.
Legal Proceedings: Any active court cases, tribunal hearings, or legal proceedings where the “State of Kerala” is a designated party will automatically substitute the entity name to the “State of Keralam” without disrupting judicial continuity.

The enactment of the Kerala (Alteration of Name) Bill, 2026 represents a victory for linguistic federalism in India. By erasing colonial-era nomenclature, the law legally validates the indigenous identity of over four crore Malayalis worldwide. It places Keralam alongside states like Odisha (formerly Orissa) and Tamil Nadu (formerly Madras State), which successfully realigned their official national identities with their deep-rooted cultural histories.

Taxation and Other Laws Amendment Bill, 2026

The Taxation and Other Laws (Amendment) Bill, 2026 is a major legislative reform passed by the Parliament of India, designed to attract foreign capital, enhance process certainty, and boost domestic electronics manufacturing. Introduced in the Lok Sabha on 4 August 2026, it passed the lower house on 6 August, cleared the Rajya Sabha on 10 August, and officially received the assent of President Droupadi Murmu on 17 August 2026.

Key Provisions and Policy Reforms:

1. Push for Electronics and Diamond Manufacturing

Capital Goods Exemption: Extends the income tax holiday until the financial year 2040–41 for foreign companies supplying capital goods, tooling, or equipment to Indian contract manufacturers.
Scope Definition: Explicitly defines “specified electronic goods” to encompass mobile phones, laptops, personal computers, tablets, servers, wearables, and their core sub-assemblies.
Component Storage: Grants a 15-year income tax exemption (ending 31 March 2041) to foreign entities storing electronic components in customs-bonded warehouses for local contract manufacturing.
Rough Diamonds: Provides a tax exemption on income derived from the sale of rough diamonds within notified special zones by foreign mining and auction entities.

2. Relaxation for Offshore Funds & Fund Managers

Condition Rationalisation: Significantly slashes the compliance requirements for eligible offshore investment funds from 13 conditions down to just 5 core safeguards.
Relocation Facilitation: Removes rigid rules—such as the minimum 25-member clause, the 10% single-investor cap, and the ₹100 crore monthly corpus limit. This allows global fund managers to relocate to India without their offshore funds being taxed under an implied domestic “business connection”.

3. Sovereign Securities & Data Infrastructure

G-Secs Incentives: Formalises tax exemptions on interest income and capital gains generated by Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) from investments in Government Securities.
Data Centre De-bottlenecking: Removes multi-layered central government notification barriers for foreign cloud firms. The exemption is also expanded to encompass Indian companies operating data centres under a lease model.

4. Real Estate & Business Trusts (REITs/InvITs)

Dividend Uniformity: Exempts unit holders of business trusts from paying tax on dividend distributions, irrespective of whether the underlying Special Purpose Vehicle (SPV) operates under the old or new concessional tax regime.
Surcharge Realignment: To offset revenue losses from the unit holder exemption, the domestic corporate surcharge for an SPV choosing the concessional tax path is raised from 10% to 25%.

MSME Development Amendment Bill 2026

The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 is a comprehensive legislative reform enacted to modernise India’s small business ecosystem. Introduced in the Rajya Sabha on 28 July 2026, the Bill cleared the Upper House on 3 August and passed the Lok Sabha on 7 August 2026. It overhauls the foundational MSMED Act, 2006 to align regulatory compliance, classification matrices, and financial protections with the scale of a modern digital economy.

1. Dynamic Classification Framework

The legislation structurally shifts how micro, small, and medium enterprises are legally defined.

The Twin-Criteria System: Under the newly substituted Section 7, the Bill anchors classification on a composite application of two parameters: investment in plant and machinery/equipment and annual turnover.
Removal of Rigid Thresholds: The original 2006 Act tied definitions to hardcoded, static statutory limits. The 2026 amendment removes these rigid clauses from the text. It explicitly empowers the Central Government to scale and adjust the operating thresholds dynamically via executive notifications, preventing growing businesses from abruptly losing developmental benefits.

2. Mandatory TReDS and Cash-Flow Protections

Addressing chronic working capital blockages and delayed payments remains a core focus of the Bill.

Statutory Mandate for CPSEs: The Bill inserts an aggressive protective clause (Section 15A), making it legally mandatory for every Central Public Sector Enterprise (CPSE) to settle vendor procurement invoices through a Reserve Bank of India (RBI)-authorised Trade Receivables Discounting System (TReDS) platform.
Broader Corporate Coverage: Beyond CPSEs, the Act grants Central and State Governments the authority to mandate TReDS invoice settlements for other large corporate buyers, authorities, and public sector bodies. To enforce accountability, notified entities must publicly disclose details of all invoices routed and settled through the platform.

3. Time-Bound Alternate Dispute Resolution (ADR)

Mediation: Any mediation proceedings brought before the MSEFC or an empanelled mediation service provider must be concluded within 90 days from the date fixed for the first appearance.
Arbitration: If mediation fails, the case must be formally referred to arbitration within 30 days.
Final Award: The arbitrator is legally required to deliver the final award within 90 days from the completion of the written pleadings.
Council Flexibility: State Governments are granted enhanced administrative flexibility to establish additional regional facilitation councils to distribute heavy caseloads efficiently.

4. Digitalisation and Ease of Doing Business

The framework heavily leans on IT integration to lower administrative overheads for emerging businesses:

Udyam Platform Validation: The Bill integrates a formal statutory foundation for the Udyam Registration Portal, establishing it as the centralised national digital platform for businesses.
Voluntary Compliance: It eliminates heavy bureaucratic mandates by making the digital filing of information entirely voluntary across all tiers, including medium manufacturing units that previously faced compulsory registration.
Decriminalisation of Offences: To foster a non-adversarial business environment, the legislation replaces traditional conviction-based criminal fines and imprisonment threats with a structured system of graded civil penalties, starting with simple warnings for first-time operational lapses.

Bankers’ Books Evidence Bill, 2026

The Bankers’ Books Evidence Bill, 2026 is a major piece of legislation passed by the Parliament of India to modernise financial legal frameworks. Introduced in the Lok Sabha on 3 August 2026, the Bill passed the Lower House on 5 August and the Rajya Sabha on 10 August 2026. It repeals and replaces the 135-year-old, colonial-era Bankers’ Books Evidence Act, 1891, formally transitioning India’s legal evidence standards from paper-based ledgers to the modern digital banking era.

Key Provisions and Policy Reforms:

1. Expanded Definition of "Bankers' Books"

Under the new framework, electronic and digital copies of banking records cannot be denied admissibility in a court of law simply because they are maintained digitally. To be treated as primary evidence, the records must satisfy strict system integrity conditions:

True Representation: The printout or data extract must be a faithful representation of the original financial data.
No Spurious Alterations: It must be proven that no unauthorised changes or data manipulations occurred.
System Security: The core hardware and software architecture must show no signs of external system tampering, cyber threats, or systemic failure during the recording period.

2. Admissibility and Integrity of Electronic Evidence

True Representation: The printout or data extract must be a faithful representation of the original financial data.
No Spurious Alterations: It must be proven that no unauthorised changes or data manipulations occurred.
System Security: The core hardware and software architecture must show no signs of external system tampering, cyber threats, or systemic failure during the recording period.

3. Standardised Digital Certification

To prevent the mandatory, disruptive summoning of bank officials to courts as routine witnesses, the Bill provides a streamlined certification matrix under Section 3. Certified printouts or electronic extractions are granted the same legal status as original books.

Authentication: Electronic records must be backed by a technical certificate detailing the parameters of the computing system that generated them.
Signatures: This certificate must be validated either via manual signatures or secured digital/electronic signatures by the designated branch head or an authorised principal officer of the bank.

4. Broadened Scope of "Legal Proceedings"

The legislation widens the definition of judicial and quasi-judicial settings where these certified records can be introduced. Beyond traditional courtrooms, it covers arbitration tribunals, formal statutory inquiries, and police investigations conducted under existing criminal codes like the Bharatiya Nagarik Suraksha Sanhita, 2023

Appropriation (No. 3) Bill, 2026

The Appropriation (No. 3) Bill, 2026 is a critical piece of fiscal legislation passed by the Indian Parliament during its Monsoon Session to regularise past government expenditures. Introduced in the Lok Sabha by Union Finance Minister Nirmala Sitharaman, the Bill was passed by the lower house on 4 August 2026 and subsequently cleared and returned by the Rajya Sabha on 6 August 2026.

In accordance with Article 114(3) of the Indian Constitution, the government cannot withdraw any funds from the Consolidated Fund of India without statutory authorisation via an Appropriation Bill. Unlike routine budget appropriation bills that allocate funds for the upcoming fiscal year, the Appropriation (No. 3) Bill, 2026, functions as a demand for excess grants. It provides retrofitted parliamentary authorisation for financial outlays that exceeded the original budgetary grants allocated during the financial year ended 31 March 2023 (FY 2022–23).

Governance Context:

The introduction of this Bill was mandated by procedural accountability. The overruns were formally reviewed and flagged by the Public Accounts Committee (PAC) in its 39th report presented to the Lok Sabha. During parliamentary debates, the finance minister asserted that the regularisation highlights the administration’s adherence to transparent and realistic budgeting practices. Because it is classified as a Money Bill, the Rajya Sabha holds limited jurisdiction and returned the legislation within the required period to ensure seamless fiscal compliance.

Disclaimer: The above-mentioned information and facts are taken from news sources such as Press Information Bureau and The Hindu. For Part 1, visit the ‘Blogs’ on our website.

ISC Explained: The 2026 Monsoon Session of the Indian Parliament (Part 2)

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