A parliamentary panel's proposal regarding dividends within the Income Tax Bill 2025 is anticipated to potentially bring relief to India Inc. The panel has suggested reinstating a key deduction in the bill, a move that aims to prevent double taxation on inter-corporate dividends, offering respite to India Inc.

The Select Committee of the Lok Sabha, led by BJP leader Baijayant Panda, examined the Income Tax Bill and adopted a report including 285 suggestions to the draft legislation. This report is slated for presentation to the House on the first day of the Monsoon session. A member of the committee indicated that the Bill is likely to be passed during the Monsoon session.

The recommendation to revive Section 80M is a key highlight. The revamped income tax law is expected to pass swiftly in the upcoming monsoon session of Parliament. After the committee submits its report, the government will review the recommendations and, if necessary, seek Cabinet approval before presenting the bill to the Lok Sabha for consideration and passage. The government is aiming to implement the new Income Tax law from April 1, 2026.

The Income Tax Bill 2025 intends to modernize and simplify the country's tax laws. According to the government, the new bill aims to use simpler language, remove redundancies, and streamline procedures and processes to improve the taxpayer experience. Once enacted, the new bill will replace the Income Tax Act, 1961, which has been amended 65 times with over 4,000 amendments to its provisions. Finance Minister Nirmala Sitharaman stated that the Income-Tax Act, 1961 would be comprehensively reviewed in a time-bound manner to make it concise and easily understandable.