Amended and updated notes on section 80M of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to deduction in respect of certain inter-corporate dividends.
Chapter VIA (Sections 80A to 80U) of the Income Tax Act 1961 deals with the provisions related to deductions to be made in computing total income. Section 80M of IT Act 1961-2023 provides for deduction in respect of certain inter-corporate dividends.
Recently, we have discussed in detail section 80-LA (Deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre) of IT Act 1961. Today, we learn the provisions of section 80M of Income-tax Act 1961. The amended provision of section 80M is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 80M of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.
Section 80M: Deduction in respect of certain inter-corporate dividends
[Section 80M shall be inserted w.e.f. 01.04.2021 by the Finance Act 2020.]
Section 80M(1) of Income Tax Act
Where the gross total income of a domestic company in any previous year includes any income by way of dividends from any other domestic company or a foreign company or a business trust, there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of such domestic company, a deduction of an amount equal to so much of the amount of income by way of dividends received from such other domestic company or foreign company or business trust as does not exceed the amount of dividend distributed by it on or before the due date.
Section 80M(2) of Income Tax Act
Where any deduction, in respect of the amount of dividend distributed by the domestic company, has been allowed under sub-section (1) in any previous year, no deduction shall be allowed in respect of such amount in any other previous year.
Explanation: For the purposes of this section, the expression “due date” means the date one month prior to the date for furnishing the return of income under sub-section (1) of section 139.