New Delhi, Feb. 15 -- The Income Tax Bill, 2025 has omitted the deduction for inter-corporate dividends for companies which opt for 22 per cent tax -- permissible under the current legislation, reported Business Line.

Under current law, a company can claim a deduction for dividends received from domestic or foreign companies, or from business trusts, when these dividends are distributed to its shareholders, preventing cascading taxation in multitier structures.

This is provided under Section 80M, introduced by the Finance Act 2020. The aim is to avoid double taxation of dividends.

For example, if company X has shares in company Y, any dividend paid by the latter to company X is considered an inter-corporate dividend. This dividend is e...