After the third Round table conference was unsuccessful, the British Government established a Joint Select Committee with the task of formulating new Act for India. The Committee consisted of sixteen members from the House of Commons and House of Lords, twenty representatives for British India and seven members from the small princely states of India. The president of the committee was Lord Linlithgow. The Committee worked for after a year and a half and finally came out with a draft bill on February 5, 1935. The Bill was discussed for a period of forty-three days in the House of Commons and for thirteen days in the House of Lords. The bill was finally signed by King of England in July 1935 and was enacted as Government of India Act of 1935.

The salient features of Government of India act, 1935 are:

British rulers promised a Federation of India, comprising both provinces and states.

The act provisioned for not to go into operation until a specified number of rulers of states had signed 'Instruments of Accession'. Since, this did not take place, the central Government continued to function accordingly the Act of 1919 and only the part of 1935 Act went into operation.

The Head of the central administration was the Governor General and he had immense powers of concerning administration, finance and legislation.

Without the permission of the Governor General, no finance bill could be placed in the Central Legislature.

The Federal Legislature consisted of two houses- the Upper House or Council of State and Lower House or Federal Assembly.

The council of State consisted of two hundred and sixty members. Out of these members hundred and twenty five were to be nominated by the rulers of princely states.

The Federal Assembly included three hundred and seventy five members. The Central Legislature possessed the right of pass any bill but the bill needed the approval of the governor General before it could be applied as a law. The Governor General had the power to build ordinances.

Few advisors were nominated to help the Secretary of State for India in the place of the Indian Council, which was abolished.

The Secretary of State was hindered from interfering in matters that the Governor dealt with, with the help of Indian ministers.

The provinces were given autonomy with respect to subjects delegated to them.

Diarchy, which had been established in the provinces by the Act of 1919, was to be established at the Center. However it came to an end in the provinces.

Two new provinces Sindh and Orissa were created

Reforms were introduced in N. W. F. P. as were in the other provinces.

Separate electorates were continued as before.

One-third Muslim representation in the Central Legislature was guaranteed.

Autonomous provincial governments in 11 provinces, under ministries responsible to legislatures, would be setup.

Burma and Aden were separated from India.

The Federal Court was established in the Center.

The Reserve Bank of India was established.