DOMESTIC COMPANY ...has made prescribed arrangements to declare dividend

[DEVKUMAR KOTHARI]

In section 2.22A of IT Act, and also in various Finance Act / Bill for example recent Finance Bill 2020 also we find meaning / definition of domestic company in clause 2 (13) as

(13) For the purposes of this section and the First Schedule,-

(a) “domestic company” means an Indian company or any other company which, in respect of its income liable to income-tax under the Income-tax Act, for the assessment year commencing on the 1st day of April, 2018, has made the prescribed arrangements for the declaration and payment within India of the dividends (including dividends on preference shares) payable out of such income;

Rates of income-tax

I. In the case of a domestic company,- (i) where its total turnover or the gross receipt in the previous year 2017-2018 does not exceed four hundred crore rupees; 25 % of the total income

(ii) other than that referred to in item (i) 30 % of the total income my curiosity (since childhood) is about significance of underlined words namely ' .... has made the prescribed arrangements for the declaration and payment within India of the dividends (....

Is it simply an old practice continuing (may be wrong) or we can say that if a company has not made arrangements to declare / pay dividend than it is not a domestic company?

hence not liable to tax, as such.

AI Summary

Debate on 'Domestic Company' Definition Under Income Tax Act: Dividend Declaration and Payment Arrangements in India A discussion in a forum revolves around the definition of a 'domestic company' under the Income Tax Act, specifically concerning the requirement for companies to make arrangements for declaring and paying dividends within India. One participant questions whether a company that hasn't made such arrangements can still be considered a domestic company and thus liable for tax. The conversation includes responses that acknowledge the query and suggest that this issue might lead to amendments. The original poster also shares experiences from their professional past and invites others to contribute their views on the matter.