Tax deduction for dividends and royalties reduces income-tax on specified foreign company payments under approved agreements. Two new sections allow an Indian company to deduct from its income tax an amount equal to the portion of tax, calculated at the average rate on dividend or royalty/fees income from specified foreign companies, which exceeds twenty five percent of that tax, where such income arises from intellectual property, know how or technical services provided under an agreement approved by the Central Government before the relevant assessment year's 1st October.