Govt May Bring Back Dividend Deduction In Overhauled Income tax Bill

In a major relief for corporate India, the government is likely to push the new Income Tax Bill 2025 in the upcoming Monsoon Session of Parliament, starting from Monday with the restoration of Section 80M—a key provision that allows companies to claim deductions on inter-corporate dividends. The move, aimed at preventing double taxation, is among over 285 suggestions adopted unanimously by a parliamentary panel reviewing the draft bill.

The draft Bill was introduced during the Budget Session and being reviewed by the select parliement committee, chaired by Member of Parliament Baijayant Panda.

The panel proposed over 285 changes to the draft law of which majority of them could be actively considered, a source in know said.

The panel has also retained the phrase “for the purpose of employment” to clearly define residency status for Indians working abroad, and recommended bringing back provisions for nil withholding tax certificates, offering relief to taxpayers on specific payments.

However, it chose not to alter Section 247(1)—related to search and seizure powers—despite intense debate during the committee’s 36 sittings. Concerns raised over the faceless assessment system and complex tax deducted at source, or TDS, rules were also flagged in the report.

The new bill is designed to modernise and simplify India’s tax code, which has remained largely unchanged for over six decades. It introduces presumptive taxation for non-residents, restructured rules for business income, stronger anti-avoidance measures, and streamlined compliance.

With industry concerns largely addressed and most recommendations greenlit, the revised legislation is now poised for smooth passage in the session beginning July 21.