Instructions for deduction of tax at source from dividends payable/paid by domestic company to foreign companies after May 28, 1971 at the rate of 24.5 per cent specified in Part II of First Schedule to Finance (No. 2) Act, 1971

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.... from dividends payable/paid by domestic company to foreign companies after May 28, 1971 at the rate of 24.5 per cent specified in Part II of First Schedule to Finance (No. 2) Act, 1971 1. I am directed to say that in the Finance (No. 2) Bill, 1971, introduced in Parliament on May 28, 1971, it has been proposed to amend the provisions in section 80M. Under the scheme of the said provisions, int....

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....he aforesaid dividends is worked out as under :   Dividend income, say Deduction u/s 80M Net dividend Rate of tax on ordinary income Effective rate on the whole of the dividend   Rs. per cent per cent per cent per cent In the case of Sl. No. (i) above 100 80 20 70 14 In the case of Sl. No. (ii) above 100 65 35 70 24.....

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....n section 80M, necessary modification has also been made in item 2(b) of Part II of the First Schedule to the said Bill with the result that the rate for deduction of tax in respect of dividends paid by any domestic company to a foreign company will now uniformly be 24.5 per cent. As it is intended to secure collection of the full amount of tax due on the dividends payable to a foreign company (th....