Context:
Finance Minister Nirmala Sitharaman tabled the Revised Income Tax Bill, 2025 in the Lok Sabha, incorporating most of the 566 recommendations from the Parliamentary Select Committee. The Bill aims to replace the six-decade-old Income Tax Act, 1961.
Key Features of the Revised Bill
- Single ‘Tax Year’ Concept
- Replaces “Previous Year” and “Assessment Year” with a single term Tax Year to simplify understanding and compliance.
- Income Tax Refunds
- Removal of clause denying refunds for late ITR filing, taxpayers can now claim refunds even after the due date.
- Corporate & MSME Relief
- ₹80 million deduction for inter-corporate dividends restored.
- MSME definition aligned with the MSME Act for uniformity across laws.
- Rationalised Property Taxation
- Notional rent on vacant property removed.
- Clear deductions for municipal taxes and interest on rented property.
- Compliance & Governance Reform
- Unnecessary provisions removed.
- CBDT empowered for framing digital-era rules.
- NIL-TDS option available for zero-liability taxpayers.
- Charitable Trust & LLP Relief
- Relaxation in transfer pricing rules.
- Alternate Minimum Tax (AMT) removed for LLPs.
- Enhanced Digital Alignment
- Structured section numbering, improved terminology, and better cross-referencing for easier navigation.
- Section 80M Deduction
- Retained deduction for intercorporate dividends for companies under special tax rate of Section 115BAA.
About MAT & AMT
- Minimum Alternate Tax (MAT):
- A tax levied on companies that show low or zero taxable income after availing various deductions and exemptions, ensuring they pay a minimum amount of tax.
- Alternate Minimum Tax (AMT):
- Similar to MAT but applicable to non-corporate taxpayers like LLPs, individuals, and firms claiming certain deductions, to ensure they pay a minimum level of tax.
What is Section 80M?
Section 80M allows a domestic company receiving dividends from another domestic company to claim deduction for the amount it distributes as dividends in the same financial year. This provision prevents taxation of the same income at multiple corporate levels.
