Deduction in respect of certain inter- corporate dividends (section 80 M)
The company received dividend shareholding by another company are inter corporate dividends. The dividend are received a domestic company are exempt from tax. The domestic company are declared dividend in receipt of dividend another domestic company. The deduction is allowed dividend are received is long same distributed dividend due date of filling return.
This section is applicable of dividend distributed on after 1st april a.y (20-21).
Before section 80M ( Inter- corporate dividend)
The inter- corporate dividend of income tax law dividend distribution tax liability holding companies received by the extent to the dividend received subsidiary companies was already paid by the dividend. All domestic company are not just holding-subsidiries relationship reducing the scope of double taxation of dividend income.
The deduction available of domestic company can be summrised :
1). Dividend received from domestic company.
2). The due date filling of return before dividend distributed one month prior period.
3). The scope of double taxation dividend income are reduced.