The Indian Councils Act 1861 was introduced because the British Government wanted to involve the Indian people with the process of law making. This Act was passed on 1st August 1861. Its main provisions were as under:

1. The Executive Council of the Governor General was extended. It was decided the members of his council should not be less than 6 and no more than 12 in number. These members were called the Additional Members of the Executive Council, and were not given any significant power with regards to legislation.
2. Governor General was empowered to nominate the Additional Members for a period of 2 years and half of the members must be non-official.
3. It was decided that from now Commander-in-chief would be appointed as an extraordinary member of the Executive Council.
4. Any bill and regulation passed by the Provincial Council could not become law until and unless Governors and the Governor General gave their assent for the bill and regulation.
Under this Act the Governor General was empowered to issue ordinances.
5. Limited powers of legislation were given to the Presidencies of Bengal and Madras and the Governor General was empowered to create similar councils for the provinces of Frontier and the Punjab.

The biggest drawback of the Act was regarding the selection and the role of the Additional Members. These members did not take part in the discussions and their role was only advisory. The non-official members of the Executive Council were not interested in attending the meetings of the Council, moreover, under this Act they were not bound to attend them either. The Indian members were not eligible to oppose any bill and most often the bills were passed in one sitting without discussion.