Income Tax Bill 2025: Parliamentary Panel suggests restoring Section 80M, Certain Deduction on inter-corporate dividends

The parliamentary panel has recently re-examined the Income Tax Bill 2025 and has suggested restoring a provision dealing with the deduction available for intercorporate dividends. This amendment has brought major relief to companies across India.

On Wednesday, the parliamentary select committee unanimously opted for its final report. Meaning, all its associated members have accepted the made amendments. The committee has made over 285 tweaks to the draft version of the bill, and the government has granted permission on all of them, as they said. Therefore, the amended version of the bill is anticipated to be effective more quickly and smoothly in the upcoming monsoon session of Parliament. It ensures that businesses can still claim deductions on inter-corporate dividends, just like they could under the older tax law.

One of the most significant recommendations made by the committee is to restore a tax provision known as Section 80M, which was missing in the new version of the bill. Section 80M assists companies in avoiding double taxation on dividend income they get from another corporate entity. This is especially important for multitier company structures, where many companies own stakes in one another. However this section was omitted by the Finance Act, 2003, w.e.f. 1-4-2004.

When Section 80M was not included in the draft of the new Income Tax Bill, this caused tension in the corporate world. Numerous experts even warned that the removal of this deduction may lead to cascading taxation, meaning the same income will be taxed multiple times as it moves from one company to another. This could have increased the tax burden on companies. This is why numerous industry representatives strongly tried to influence the government and the parliamentary panel to bring back Section 80M.

Hence, now, after listening to so many requests from business representatives, the parliamentary panel now recommended restoring Section 80M in the new Income Tax Bill. The parliamentary panel listened to the industry’s concerns and recommended that Section 80M be restored in the new Income Tax Bill.