Taxation of Dividend and Deemed Dividend

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... • any distribution to its shareholders by a company of debentures, debenture-stock, or deposit certificates in any form, with or without interest, and • any distribution to its preference shareholders of shares by way of bonus, to the extent to which the company possesses accumulated profits, whether capitalised or not; Clause (c): Distribution on Liquidation • any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not; Clause (d): Distribution on Reduction of Capital • any distribution to its shareholders by a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ny, or business trust Applicability  The gross total income of a domestic company in any tax year includes dividend income Condition Dividend must be redistributed by the company Deduction Limit Limited to the amount of dividend distributed Time Condition Distribution must be made at least 1 month before the due date of filling return of income under section 263(1) Restriction Same deduction cannot be claimed in multiple tax years =============================== Under Income Tax Act, 1961 Taxation of Dividend & Deemed Dividend from F.Y. From 2020-21 to 2025-26 The Dividend Distribution Tax was removed by the Finance Act 2020, Now the dividend will be taxable a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of Bonus, (to the extent to which company possesses accumulated profit.) Section 2(22)(c) - Distributions made during liquidation Any Distribution of Assets by a company on liquidation to the extent to which company possesses accumulated profit. Section 2(22)(d) - Distributions upon capital reduction Any distribution to its shareholders by Company on reduction of its capital to the extent to which company possesses accumulated profit. Note :- 1. Accumulated Profit u/s 2(22)(a)/(b)/(c)/(d) whether Capitalised or not. 2. Applicable to all Companies. Section 2(22)(e) - Loans and advances to significant shareholders Any loan or advance made after Ma....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....oreign company or business trust then a) Aggregate dividend Income received (include deemed dividend) or dividend distributed to shareholders upto due date whichever is lower shall be allowed as deduction to the company. ===============================   Rates of Dividend Tax Rates for the Financial Year 2018-19 to 2019-20 Section 115O Any addition to the income-tax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1st day of April, 2003, whether out of current or accumulated profits shall be charged to additional income-tax as per rates given b....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d Other than deemed dividend = 15%  [Reverse Calculation] Section 115QA 3. Distributed income of domestic company for buy-back of unlisted shares = 20% Notes: Note 1: - Add Surcharge - Surcharge is 12% of income-tax in case of domestic companies Note 2: - Add Education Cess - E. Cess is 2% of Income Tax plus surcharge Note 3: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax plus surcharge Note 4: - Dividend (other than dividend tax) is exempt in the hands of shareholder u/s 10(34)   =============================== Rates of Dividend Tax Rates for the Financial Year 2015-16 & FY 2016-17 Section 115O ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ase of domestic companies Note 2: - Add Education Cess - E. Cess is 2% of Income Tax plus surcharge Note 3: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax plus surcharge Note 4: - Dividend (other than dividend tax) is exempt in the hands of shareholder u/s 10(34)   =============================== Rates of Dividend Tax Rates for the Financial Year 2013 - 2014 Section 115O 1. Deemed Dividend u/s 2(22)(e) = NA 2. Dividend Other than deemed dividend = 15% Section 115QA 3. Distributed income of domestic company for buy-back of unlisted shares = 20% Section 115TA 4. Distribution by securitization trust to ....