- Dividend income received by shareholders is now taxable in their hands at normal tax rates instead of being exempt as was the case earlier.
- Deduction of up to 20% of dividend income is allowed for interest expenses incurred to earn the dividend income. No other expenses are deductible.
- For companies receiving dividends, a deduction under section 80M is available if the dividend amount is distributed to shareholders one month before the income tax return filing date.
This document discusses the meaning, conditions, and payment of advance tax in India according to the Income Tax Act. It provides details on:
- When advance tax is required to be paid based on age and income amount.
- The calculation of advance tax amount and the percentage that must be paid by certain due dates (15th of June, September, December, and March).
- Interest charges for late or deferred payment of advance tax installments.
- Conditions where the Assessing Officer can issue an order requiring payment of advance tax.
- Computation of advance tax amount in cases where the Assessing Officer issues such an order.
Presentation on TCS under section 206C (1H ) Taxmann
In this Presentation 헗헿. 헩헶헻헼헱 헞. 헦헶헻헴헵헮헻헶헮 has shared an Overview on "TCS under section 206C (1H)"
Topics Covered in this Presentation :
1. Who is liable to collect tax at the source?
A. “Seller” is required to collect tax at the source.
2. From whom tax is to be collected
A. Tax is required to be collected from buyers of goods.
3. Time of tax collection at source
4. Rate of TCS
5. When TCS is not required
6. Lower/nil TCS certificate
7. A few clarifications
8. Case-studies
The document summarizes key income tax implications in India for the financial year 2022-23 based on amendments made in the Finance Act 2022.
It outlines that income tax rates, health and education cess rates, and surcharge rates remain unchanged for FY2022-23. It introduces provisions for taxation of virtual digital assets at 30% and mandatory TDS of 1% on transfer of such assets. It also allows individuals to file an updated income tax return within 24 months of the assessment year on payment of additional tax. The document provides details of various deductions available under Chapter VI-A of the Income Tax Act.
The document provides information about filing income tax returns in India. It discusses things to keep in mind before filing a return such as ensuring contact details are updated. It notes the income tax forms for the 2022-23 financial year were notified earlier than previous years. Reasons for filing a return include claiming a refund, obtaining loans, or adjusting capital gains/losses. It outlines the process for mandatory and voluntary return filing as well as due dates and consequences of late filing. Defective returns, revised/updated returns, and penalties for default are also summarized.
TDS is required to be deducted from payments made to resident contractors or sub-contractors under section 194C of the Income Tax Act if the aggregate amount exceeds Rs. 75,000 in a financial year. TDS of 1% or 2% depending on the recipient must be deducted unless the PAN is not quoted, in which case the rate is 20%. The deducted TDS must be deposited with the government within 7 days of the end of the month in which the deduction was made.
Find out the detailed explanation of the provisions related to Offences and Penalties under the dual GST Law for the efficient tax administration from the presentation. Give it a read and we would love to know your feedback!
This document discusses income from house property under section 22 of the Indian Income Tax Act. It defines annual value, deemed ownership, gross annual value, deductions allowed from house property income like interest on borrowed capital, and provides examples of practice sums to calculate income from house property.
This document discusses the meaning, conditions, and payment of advance tax in India according to the Income Tax Act. It provides details on:
- When advance tax is required to be paid based on age and income amount.
- The calculation of advance tax amount and the percentage that must be paid by certain due dates (15th of June, September, December, and March).
- Interest charges for late or deferred payment of advance tax installments.
- Conditions where the Assessing Officer can issue an order requiring payment of advance tax.
- Computation of advance tax amount in cases where the Assessing Officer issues such an order.
Presentation on TCS under section 206C (1H ) Taxmann
In this Presentation 헗헿. 헩헶헻헼헱 헞. 헦헶헻헴헵헮헻헶헮 has shared an Overview on "TCS under section 206C (1H)"
Topics Covered in this Presentation :
1. Who is liable to collect tax at the source?
A. “Seller” is required to collect tax at the source.
2. From whom tax is to be collected
A. Tax is required to be collected from buyers of goods.
3. Time of tax collection at source
4. Rate of TCS
5. When TCS is not required
6. Lower/nil TCS certificate
7. A few clarifications
8. Case-studies
The document summarizes key income tax implications in India for the financial year 2022-23 based on amendments made in the Finance Act 2022.
It outlines that income tax rates, health and education cess rates, and surcharge rates remain unchanged for FY2022-23. It introduces provisions for taxation of virtual digital assets at 30% and mandatory TDS of 1% on transfer of such assets. It also allows individuals to file an updated income tax return within 24 months of the assessment year on payment of additional tax. The document provides details of various deductions available under Chapter VI-A of the Income Tax Act.
The document provides information about filing income tax returns in India. It discusses things to keep in mind before filing a return such as ensuring contact details are updated. It notes the income tax forms for the 2022-23 financial year were notified earlier than previous years. Reasons for filing a return include claiming a refund, obtaining loans, or adjusting capital gains/losses. It outlines the process for mandatory and voluntary return filing as well as due dates and consequences of late filing. Defective returns, revised/updated returns, and penalties for default are also summarized.
TDS is required to be deducted from payments made to resident contractors or sub-contractors under section 194C of the Income Tax Act if the aggregate amount exceeds Rs. 75,000 in a financial year. TDS of 1% or 2% depending on the recipient must be deducted unless the PAN is not quoted, in which case the rate is 20%. The deducted TDS must be deposited with the government within 7 days of the end of the month in which the deduction was made.
Find out the detailed explanation of the provisions related to Offences and Penalties under the dual GST Law for the efficient tax administration from the presentation. Give it a read and we would love to know your feedback!
This document discusses income from house property under section 22 of the Indian Income Tax Act. It defines annual value, deemed ownership, gross annual value, deductions allowed from house property income like interest on borrowed capital, and provides examples of practice sums to calculate income from house property.
This document provides an overview of tax deductions available under Sections 80C to 80U of the Indian Income Tax Act. It explains that these deductions are intended to incentivize taxpayers to engage in socially desirable activities and investments. The key deductions covered include those for life insurance premiums (Section 80C), pension contributions (Section 80CCC), medical insurance (Section 80D), treatment of disabled dependents (Section 80DD), tuition fees (Section 80E), interest on education loans (Section 80E), rent payments (Section 80GG), among others. Eligibility conditions and calculation of allowable deductions for each section are described.
OBJECTIVE
To check if the levy and collection of GST is in order, there also needs to be monitoring of offences committed by any person in contravention to provisions of this Act. The GST Law imposes penalties and prosecution for offences depending on the intention of the person committing the offence. In this Webinar we will be learning about the provisions of the GST Act regarding the major offences, penalty leviable, prosecutions for sepcified offenses and general disciplines relating to penalty.
The document provides an overview of refunds under the GST regime in India. It discusses 12 situations in which refunds may arise, the relevant legal provisions, definitions of refunds, time limits for claiming refunds, refund procedures, basic features of refunds including adjustment, withholding, interest payment and documents required. Refunds can arise due to excess tax payment, exports, provisional assessments, court/tribunal orders and other scenarios.
The document discusses income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any buildings or lands owned by an assessee. It provides details on computation of gross annual value, deductions allowed, treatment of self-occupied properties, and exempted incomes from house property. The key steps involved in computing income from house property are determining the annual value, calculating the net annual value, and claiming allowed deductions.
This document provides an overview of Tax Deduction at Source (TDS) in India. TDS refers to tax deducted at the source of income by the payer from amounts paid to the recipient. The key points covered are:
- TDS is an advance tax paid to the government and the tax deducted has to be deposited within a specified time.
- Employers, government bodies, companies, banks, and other specified entities are responsible for deducting TDS based on the type of payment and thresholds.
- Various sections of the Income Tax Act specify the rates of TDS to be applied on different types of income such as salaries, interest, rent, professional fees, lottery winnings
Profit & Gains from Business or Profession.RAJESH JAIN
This document provides an overview of income from business and profession under the Indian Income Tax Act. It defines business and profession, outlines the key points and basis of charge for income from business/profession. It also discusses the computation of income, specific deductions allowed, depreciation rules and amounts that are not deductible. The key information includes definitions of business and profession, income includes profits and losses, relevance of accounting method, and that income from illegal businesses is taxable.
The document summarizes changes made to tax deducted at source (TDS) provisions by the Finance Act of 2020. Several existing sections related to TDS were amended and new sections for TDS on various types of payments were introduced. Key changes include amendments to TDS for dividends, interest, technical services fees, and mutual fund income. New sections introduce TDS for cash withdrawals, business trust unit income, and e-commerce participant payments. The changes are effective from financial years 2020-21 onward.
This document summarizes various tax deductions available under sections 80C to 80U of the Indian Income Tax Act of 1961. It discusses deductions available for investments, medical expenses, education loans, rent payments, and for persons with disabilities. Key deductions include up to Rs. 1,00,000 under section 80C for investments, Rs. 15,000/10,000 under section 80D for medical insurance, and a fixed deduction of Rs. 50,000/75,000 under section 80U for persons with/severe disabilities. The aggregate of deductions cannot exceed total gross income.
This document provides information about income tax in India. It discusses the history of income tax dating back over 3,000 years to ancient Egypt and Greece. It was first introduced in India in 1860. The document outlines the various income tax authorities in India and provides definitions of key terms like assessee, person, assessment year, and previous year. It also describes the different types of income tax return forms (ITR) individuals and organizations can file. Other sections cover interest charges, advance tax payment due dates, and details of the Income Disclosure Scheme of 2016 for declaring undisclosed income and paying tax at concessional rates.
1. presentation on input tax credit under gstNarayan Lodha
GST, Goods And Service Tax, Basic Concept and Principals of Input Credit under GST, Availability of ITC in Special cases, ITC- Input Service Distributor, Electronic Cash Ledger, Electronic Credit Ledger, Refund of Tax under GST
TDS stands for tax deducted at source, where any person making certain types of payments is required to deduct tax from the payment and deposit it with the government. The key points covered are:
- Common sections related to TDS include 192 (salaries), 193 (interest), 194A (other interest), 194C (contractors), among others.
- Rates and thresholds vary based on the type of payment and recipient. Rates are typically 10-20% and thresholds are amounts like Rs. 30,000 for contractors.
- The payer is responsible for depositing the TDS, issuing certificates to payees, and filing annual returns. Payees can claim credit for TDS against
This document summarizes key provisions around deductions allowed under business and professional income in the Income Tax Act. It discusses sections related to deductible expenses like depreciation, preliminary expenses, scientific research, etc. It also covers inadmissible expenses and special provisions for certain industries. Specific deductions are outlined for tea/coffee development funds, site restoration funds, voluntary retirement schemes, and insurance premiums. The document categorizes the various deduction sections and provides explanations of select concepts like block of assets and mandatory claiming of depreciation.
Section 207 discusses advance tax, which is payable on total income chargeable to tax for the assessment year immediately following the financial year. Advance tax is paid as income is earned throughout the year.
Sections 208-211 provide more details on advance tax payment requirements. Advance tax must be paid in installments if tax liability is over Rs. 10,000. Companies must pay in 4 installments while others pay in 3 installments.
Failure to pay advance tax when required makes the taxpayer an "assessee in default" subject to interest under sections 234B, 234C and penalty under section 140A.
1. The document discusses the registration provisions under the Central Goods and Services Tax Act, including who is liable for registration, the registration procedure, and provisions around amendment, cancellation, and revocation of registration.
2. Key sections covered include sections 22-29 which deal with liability, exemptions, compulsory registration, registration procedure, deemed and special registrations, amendment of registration, cancellation of registration, and revocation of cancellation.
3. The registration process involves applying for registration, verification and approval, issuance of certificate, amendments, cancellations, and includes 30 registration forms prescribed.
The document discusses the concept of supply under the GST law. It defines supply under Section 7 of the CGST Act to include all forms of supply of goods or services such as sale, transfer, license etc. made for a consideration in the course of business. It also includes import of services for consideration and activities listed in Schedule I without consideration. The key activities that constitute supply are discussed along with relevant definitions.
Divisible profit refers to the profit available for distribution as dividend after providing for depreciation. Dividend can only be declared out of current year's profits or undistributed profits of previous years. Various legal provisions under the Companies Act govern the declaration and payment of dividend including transfer of a portion of profits to reserves, payment within 30 days, transfer of unpaid dividend to a separate account, and subsequent transfer to the Investor Education and Protection Fund. Dividend includes distributions of various kinds but excludes buyback of shares or distributions under amalgamation schemes.
Divisible profit refers to the profit available for distribution as dividend after providing for depreciation. Dividend can only be declared out of current year's profits or undistributed profits of previous years. Various legal provisions under the Companies Act govern the declaration and payment of dividend including transfer of a portion of profits to reserves, payment within 30 days, transfer of unpaid dividend to a separate account, and subsequent transfer to the Investor Education and Protection Fund. Dividend includes distributions of various kinds but excludes buyback of shares or distributions under schemes of amalgamation or demerger. Capital profits like profit on sale of assets cannot be treated as divisible profits.
This document provides an overview of tax deductions available under Sections 80C to 80U of the Indian Income Tax Act. It explains that these deductions are intended to incentivize taxpayers to engage in socially desirable activities and investments. The key deductions covered include those for life insurance premiums (Section 80C), pension contributions (Section 80CCC), medical insurance (Section 80D), treatment of disabled dependents (Section 80DD), tuition fees (Section 80E), interest on education loans (Section 80E), rent payments (Section 80GG), among others. Eligibility conditions and calculation of allowable deductions for each section are described.
OBJECTIVE
To check if the levy and collection of GST is in order, there also needs to be monitoring of offences committed by any person in contravention to provisions of this Act. The GST Law imposes penalties and prosecution for offences depending on the intention of the person committing the offence. In this Webinar we will be learning about the provisions of the GST Act regarding the major offences, penalty leviable, prosecutions for sepcified offenses and general disciplines relating to penalty.
The document provides an overview of refunds under the GST regime in India. It discusses 12 situations in which refunds may arise, the relevant legal provisions, definitions of refunds, time limits for claiming refunds, refund procedures, basic features of refunds including adjustment, withholding, interest payment and documents required. Refunds can arise due to excess tax payment, exports, provisional assessments, court/tribunal orders and other scenarios.
The document discusses income from house property under the Indian Income Tax Act. It defines income from house property as the annual value of any buildings or lands owned by an assessee. It provides details on computation of gross annual value, deductions allowed, treatment of self-occupied properties, and exempted incomes from house property. The key steps involved in computing income from house property are determining the annual value, calculating the net annual value, and claiming allowed deductions.
This document provides an overview of Tax Deduction at Source (TDS) in India. TDS refers to tax deducted at the source of income by the payer from amounts paid to the recipient. The key points covered are:
- TDS is an advance tax paid to the government and the tax deducted has to be deposited within a specified time.
- Employers, government bodies, companies, banks, and other specified entities are responsible for deducting TDS based on the type of payment and thresholds.
- Various sections of the Income Tax Act specify the rates of TDS to be applied on different types of income such as salaries, interest, rent, professional fees, lottery winnings
Profit & Gains from Business or Profession.RAJESH JAIN
This document provides an overview of income from business and profession under the Indian Income Tax Act. It defines business and profession, outlines the key points and basis of charge for income from business/profession. It also discusses the computation of income, specific deductions allowed, depreciation rules and amounts that are not deductible. The key information includes definitions of business and profession, income includes profits and losses, relevance of accounting method, and that income from illegal businesses is taxable.
The document summarizes changes made to tax deducted at source (TDS) provisions by the Finance Act of 2020. Several existing sections related to TDS were amended and new sections for TDS on various types of payments were introduced. Key changes include amendments to TDS for dividends, interest, technical services fees, and mutual fund income. New sections introduce TDS for cash withdrawals, business trust unit income, and e-commerce participant payments. The changes are effective from financial years 2020-21 onward.
This document summarizes various tax deductions available under sections 80C to 80U of the Indian Income Tax Act of 1961. It discusses deductions available for investments, medical expenses, education loans, rent payments, and for persons with disabilities. Key deductions include up to Rs. 1,00,000 under section 80C for investments, Rs. 15,000/10,000 under section 80D for medical insurance, and a fixed deduction of Rs. 50,000/75,000 under section 80U for persons with/severe disabilities. The aggregate of deductions cannot exceed total gross income.
This document provides information about income tax in India. It discusses the history of income tax dating back over 3,000 years to ancient Egypt and Greece. It was first introduced in India in 1860. The document outlines the various income tax authorities in India and provides definitions of key terms like assessee, person, assessment year, and previous year. It also describes the different types of income tax return forms (ITR) individuals and organizations can file. Other sections cover interest charges, advance tax payment due dates, and details of the Income Disclosure Scheme of 2016 for declaring undisclosed income and paying tax at concessional rates.
1. presentation on input tax credit under gstNarayan Lodha
GST, Goods And Service Tax, Basic Concept and Principals of Input Credit under GST, Availability of ITC in Special cases, ITC- Input Service Distributor, Electronic Cash Ledger, Electronic Credit Ledger, Refund of Tax under GST
TDS stands for tax deducted at source, where any person making certain types of payments is required to deduct tax from the payment and deposit it with the government. The key points covered are:
- Common sections related to TDS include 192 (salaries), 193 (interest), 194A (other interest), 194C (contractors), among others.
- Rates and thresholds vary based on the type of payment and recipient. Rates are typically 10-20% and thresholds are amounts like Rs. 30,000 for contractors.
- The payer is responsible for depositing the TDS, issuing certificates to payees, and filing annual returns. Payees can claim credit for TDS against
This document summarizes key provisions around deductions allowed under business and professional income in the Income Tax Act. It discusses sections related to deductible expenses like depreciation, preliminary expenses, scientific research, etc. It also covers inadmissible expenses and special provisions for certain industries. Specific deductions are outlined for tea/coffee development funds, site restoration funds, voluntary retirement schemes, and insurance premiums. The document categorizes the various deduction sections and provides explanations of select concepts like block of assets and mandatory claiming of depreciation.
Section 207 discusses advance tax, which is payable on total income chargeable to tax for the assessment year immediately following the financial year. Advance tax is paid as income is earned throughout the year.
Sections 208-211 provide more details on advance tax payment requirements. Advance tax must be paid in installments if tax liability is over Rs. 10,000. Companies must pay in 4 installments while others pay in 3 installments.
Failure to pay advance tax when required makes the taxpayer an "assessee in default" subject to interest under sections 234B, 234C and penalty under section 140A.
1. The document discusses the registration provisions under the Central Goods and Services Tax Act, including who is liable for registration, the registration procedure, and provisions around amendment, cancellation, and revocation of registration.
2. Key sections covered include sections 22-29 which deal with liability, exemptions, compulsory registration, registration procedure, deemed and special registrations, amendment of registration, cancellation of registration, and revocation of cancellation.
3. The registration process involves applying for registration, verification and approval, issuance of certificate, amendments, cancellations, and includes 30 registration forms prescribed.
The document discusses the concept of supply under the GST law. It defines supply under Section 7 of the CGST Act to include all forms of supply of goods or services such as sale, transfer, license etc. made for a consideration in the course of business. It also includes import of services for consideration and activities listed in Schedule I without consideration. The key activities that constitute supply are discussed along with relevant definitions.
Divisible profit refers to the profit available for distribution as dividend after providing for depreciation. Dividend can only be declared out of current year's profits or undistributed profits of previous years. Various legal provisions under the Companies Act govern the declaration and payment of dividend including transfer of a portion of profits to reserves, payment within 30 days, transfer of unpaid dividend to a separate account, and subsequent transfer to the Investor Education and Protection Fund. Dividend includes distributions of various kinds but excludes buyback of shares or distributions under amalgamation schemes.
Divisible profit refers to the profit available for distribution as dividend after providing for depreciation. Dividend can only be declared out of current year's profits or undistributed profits of previous years. Various legal provisions under the Companies Act govern the declaration and payment of dividend including transfer of a portion of profits to reserves, payment within 30 days, transfer of unpaid dividend to a separate account, and subsequent transfer to the Investor Education and Protection Fund. Dividend includes distributions of various kinds but excludes buyback of shares or distributions under schemes of amalgamation or demerger. Capital profits like profit on sale of assets cannot be treated as divisible profits.
TAX PLANNING WITH REFERENCE TO FINANCIAL MANAGEMENTArup Bordoloi
This document discusses tax planning relating to financial management decisions. It covers how capital structure, means of financing, and dividend policy can impact tax liability. Optimal capital structure and use of debt versus equity can lower tax costs. Dividends are taxable but distributing bonuses shares to equity holders does not incur tax liability and increases the shareholder's cost basis. The document provides details on what qualifies as a dividend and how expenses related to dividend income can be deducted.
This document provides sample answers for questions on the Taxation-1 exam for the Professional Stage (Knowledge Level) in Bangladesh. It includes answers on topics like how governments use taxation to manage economies, who is liable for tax and on what types of income, the concept of tax residency, definitions of terms like perquisite, consequences of failing to deduct tax, short notes on topics like tax avoidance and evasion, and procedures for applying for tax holidays. The document is intended as a reference for those preparing to take the Taxation-1 professional exam.
The document defines dividends and outlines the legal regime governing dividends in India according to the Companies Act of 1956. It discusses how dividends are declared based on profits, the process for declaring interim and final dividends, requirements for transferring unpaid dividends, and principles related to divisible profits. Key points include:
1) A dividend is a payment made to shareholders from current or past year profits. Companies can retain profits or pay them as dividends.
2) Dividends must be recommended by the board and declared by shareholders. They are paid from current or past profits after accounting for depreciation.
3) Unpaid dividends must be transferred to a special account within 7 days, and un
The document summarizes key highlights of the Union Budget 2014-2015 for direct and indirect taxes in India. For direct taxes, it outlines changes to income tax slabs and rates for individuals, senior citizens, companies and firms. It also discusses changes to deductions, exemptions and tax rates for capital gains and dividends. For indirect taxes, it summarizes changes to service tax rates and exemptions, and introduces service tax on radio taxis. It also discusses changes to interest rates on late payment of taxes.
This document provides highlights of the Union Budget 2014-2015 for India. Some key points include:
- The basic income tax exemption limit has been increased by Rs. 50,000. Tax rates remain unchanged.
- Deduction limits under Section 80C have been increased from Rs. 100,000 to Rs. 150,000.
- Service tax rate remains at 12% and is extended to new services like radio taxis.
- Exemptions under the mega exemption notification have been extended to some services and withdrawn from others.
- Changes have been made to provisions around interest on late payment of taxes, e-payment of service tax, and the reverse charge mechanism.
The document discusses Minimum Alternate Tax (MAT) under Section 115JB of the Income Tax Act, 1961. It was introduced to tax "zero tax companies" that showed profits but paid no tax. MAT is calculated at 18.5% of book profits, which are adjusted net profits as per financial statements. Various additions and deductions are prescribed to calculate book profits for MAT. The document explains the objective, history, charging section, applicability, computation of book profits, and adjustments in detail over multiple pages.
This document provides an overview of key Indian tax rates, rules, and regulations for the assessment years 2021-22 and 2022-23. It summarizes income tax slabs and rates for individuals, HUF, firms, companies and cooperative societies. It also outlines key tax deducted at source provisions around applicable thresholds and rates for common income types like salary, interest, dividends, rent, professional fees, and payments to contractors.
The document summarizes tax credits and the carry forward and set-off of losses under Pakistan's income tax law. It discusses various tax credits available under sections 61-64 of the law for donations, investments, pension contributions, and profit on debt. It also covers rules for setting off current year losses against other income, carrying losses forward for up to 6 years, exceptions for certain losses, group relief for losses between subsidiaries and parents, and limitations.
Taxmann's Highlights of the Finance Bill, 2021 – Income TaxTaxmann
The document summarizes key proposals in the Finance Bill 2021 related to direct taxes in India. Some key points include:
1. Exemption proposed for cash allowance received in lieu of leave travel concession during COVID-19, subject to conditions.
2. Threshold for tax audit increased to Rs. 10 crore from Rs. 5 crore if at least 95% transactions are through digital modes.
3. Time limits reduced for processing ITR, notice for scrutiny and reopening assessments.
4. Faceless scheme proposed for ITAT appeals and new Dispute Resolution Committee for small taxpayers.
5. Income-tax Settlement Commission to be discontinued and replaced by Interim Board of Settlement.
The document summarizes key proposals in the Indian Budget 2013 relating to direct and indirect taxes. For direct taxes, it outlines changes such as increased surcharge rates for foreign companies, a new tax on commodities derivatives trading, increased royalty and technical fee rates, and incentives for manufacturing investments over $20 million. It also covers proposals relating to power sector incentives, dividend distributions, and taxation of alternative investment funds. For indirect taxes, it notes customs, excise, and service tax changes.
Our Tax team has summarised the important compliance related provisions of Income Tax Act 1961 and prepared the compliance hand book for easy reference.
Income Tax Amendments Applicable to AY 2020-21 (FY 2019-20)AmitJain910
This document discusses important amendments to consider while filing income tax returns for assessment year 2020-21 relating to rebates, surcharges, tax rates, deductions, depreciation, TDS provisions, capital gains exemption, and more. Key points include a reduced MAT rate of 15%, option to purchase two homes for capital gains exemption, increased standard deduction and TDS limits on rent and cash withdrawals.
This document provides an overview of Section 14A of the Indian Income Tax Act, which disallows a deduction for expenditures incurred to earn exempt income. Key points covered include:
- Section 14A was introduced in 2001 to prevent taxpayers from claiming deductions for expenses incurred to earn tax-free income.
- Rule 8D prescribes a formula for computing the disallowed amount which often exceeds actual expenses and is highly unfair.
- A special bench decision in 2009 expanded Section 14A's scope to apply even if no exempt income was actually earned in a year.
- This has significant implications, potentially disallowing part of interest expenses even for long-term strategic investments where no current income is received.
This chapter discusses the rules for aggregation of income, set-off and carry forward of losses under the Income Tax Act. Key points include:
- Losses from one source of income can be adjusted against income from another source under the same head.
- Losses can be carried forward for a maximum of 8 assessment years for set-off against future profits. Exceptions apply for some specific heads.
- Loss from one head, except capital gains, can be set off against income from another head. However, business loss cannot be set off against salary income.
- Loss from house property can be set off against other income up to Rs. 2 lakhs annually. Unabsorbed loss can be
MAT was introduced to ensure companies that declare large profits pay a minimum amount of tax. It applies when the tax liability calculated under normal provisions is less than 10% of book profits. Book profits are calculated by making adjustments to net profits as per financial statements. Positive adjustments include taxes paid and reserves created, while negative adjustments include depreciation and carried forward losses. MAT credit allows taxes paid under MAT to be carried forward for set off against future tax liability for 7 years. While MAT aims to increase tax collection, it can disadvantage medium companies and those in special economic zones.
The document provides an overview and analysis of key provisions in the Indian Union Budget 2020 relating to direct and indirect taxation. Some key highlights include:
- Introduction of a new optional tax regime with lower tax slabs but without deductions for individuals and HUFs.
- Reduction of corporate tax rates for new domestic manufacturing companies.
- Tax incentives for affordable housing, startups, and investments in electricity generation plants.
- Measures to simplify tax administration such as expansion of faceless assessment proceedings and introduction of a taxpayer's charter.
- A dispute resolution scheme called "Vivaad Se Vishwas" to reduce pending direct tax litigation.
- Changes to tax rates for employer contributions to
The document provides an overview of key provisions under the Indian Income Tax Act. It discusses various heads of income like salary, house property, capital gains, and business income. It summarizes important points around deductions available for HRA, interest on housing loans, losses from house property rental, and capital gains from sale of art. The document also discusses key compliance requirements like TDS, advance tax payments, and income tax return filing due dates. It summarizes special provisions for new units in SEZs, additional depreciation, and deductions available for undertakings located in certain states.
Business law for the students of undergraduate level. The presentation contains the summary of all the chapters under the syllabus of State University, Contract Act, Sale of Goods Act, Negotiable Instrument Act, Partnership Act, Limited Liability Act, Consumer Protection Act.
Defending Weapons Offence Charges: Role of Mississauga Criminal Defence LawyersHarpreetSaini48
Discover how Mississauga criminal defence lawyers defend clients facing weapon offence charges with expert legal guidance and courtroom representation.
To know more visit: https://www.saini-law.com/
Matthew Professional CV experienced Government LiaisonMattGardner52
As an experienced Government Liaison, I have demonstrated expertise in Corporate Governance. My skill set includes senior-level management in Contract Management, Legal Support, and Diplomatic Relations. I have also gained proficiency as a Corporate Liaison, utilizing my strong background in accounting, finance, and legal, with a Bachelor's degree (B.A.) from California State University. My Administrative Skills further strengthen my ability to contribute to the growth and success of any organization.
सुप्रीम कोर्ट ने यह भी माना था कि मजिस्ट्रेट का यह कर्तव्य है कि वह सुनिश्चित करे कि अधिकारी पीएमएलए के तहत निर्धारित प्रक्रिया के साथ-साथ संवैधानिक सुरक्षा उपायों का भी उचित रूप से पालन करें।
Genocide in International Criminal Law.pptxMasoudZamani13
Excited to share insights from my recent presentation on genocide! 💡 In light of ongoing debates, it's crucial to delve into the nuances of this grave crime.
The Future of Criminal Defense Lawyer in India.pdfveteranlegal
https://veteranlegal.in/defense-lawyer-in-india/ | Criminal defense Lawyer in India has always been a vital aspect of the country's legal system. As defenders of justice, criminal Defense Lawyer play a critical role in ensuring that individuals accused of crimes receive a fair trial and that their constitutional rights are protected. As India evolves socially, economically, and technologically, the role and future of criminal Defense Lawyer are also undergoing significant changes. This comprehensive blog explores the current landscape, challenges, technological advancements, and prospects for criminal Defense Lawyer in India.
Sangyun Lee, 'Why Korea's Merger Control Occasionally Fails: A Public Choice ...Sangyun Lee
Presentation slides for a session held on June 4, 2024, at Kyoto University. This presentation is based on the presenter’s recent paper, coauthored with Hwang Lee, Professor, Korea University, with the same title, published in the Journal of Business Administration & Law, Volume 34, No. 2 (April 2024). The paper, written in Korean, is available at <https://shorturl.at/GCWcI>.
This document briefly explains the June compliance calendar 2024 with income tax returns, PF, ESI, and important due dates, forms to be filled out, periods, and who should file them?.
Lifting the Corporate Veil. Power Point Presentationseri bangash
"Lifting the Corporate Veil" is a legal concept that refers to the judicial act of disregarding the separate legal personality of a corporation or limited liability company (LLC). Normally, a corporation is considered a legal entity separate from its shareholders or members, meaning that the personal assets of shareholders or members are protected from the liabilities of the corporation. However, there are certain situations where courts may decide to "pierce" or "lift" the corporate veil, holding shareholders or members personally liable for the debts or actions of the corporation.
Here are some common scenarios in which courts might lift the corporate veil:
Fraud or Illegality: If shareholders or members use the corporate structure to perpetrate fraud, evade legal obligations, or engage in illegal activities, courts may disregard the corporate entity and hold those individuals personally liable.
Undercapitalization: If a corporation is formed with insufficient capital to conduct its intended business and meet its foreseeable liabilities, and this lack of capitalization results in harm to creditors or other parties, courts may lift the corporate veil to hold shareholders or members liable.
Failure to Observe Corporate Formalities: Corporations and LLCs are required to observe certain formalities, such as holding regular meetings, maintaining separate financial records, and avoiding commingling of personal and corporate assets. If these formalities are not observed and the corporate structure is used as a mere façade, courts may disregard the corporate entity.
Alter Ego: If there is such a unity of interest and ownership between the corporation and its shareholders or members that the separate personalities of the corporation and the individuals no longer exist, courts may treat the corporation as the alter ego of its owners and hold them personally liable.
Group Enterprises: In some cases, where multiple corporations are closely related or form part of a single economic unit, courts may pierce the corporate veil to achieve equity, particularly if one corporation's actions harm creditors or other stakeholders and the corporate structure is being used to shield culpable parties from liability.
1. Taxation of Income from Dividend & Deemed Dividend 1 |
TAXATION OF DIVIDEND INCOME
SECTION 8
Dividend Income
For the purposes of inclusion in the total income of an assessee,—
(a) any dividend declared by a company or distributed or paid by it within the
meaning of section 2(22)(a)/(b)/(c)/(d)/(e) shall be deemed to be the income of
the previous year in which it is so declared, distributed or paid, as the case may
be;
(b) any interim dividend shall be deemed to be the income of the previous year
in which the amount of such dividend is unconditionally made available by
the company to the member who is entitled to it.
SECTION 56
Income from Other Sources
Dividend income, shall be chargeable to tax under the head ‘Income From other
sources’.
Dividend includes deemed dividend under section 2(22)(a)/(b)/(c)/(d)/(e).
PROVISO TO SECTION 57
Deductions from Dividend Income
Provided that no deduction shall be allowed from the dividend income, or income in
respect of units of a Mutual Fund specified under section 10(23D), other than
deduction on account of interest expense, and in any previous year such deduction
shall not exceed 20% of the dividend income, or income in respect of such units,
included in the total income for that year, without deduction under this section.
(Added by Finance Act, 2020)
SECTION 80M
Deduction in Respect of Certain Inter-corporate Dividends
(1) Where the gross total income of a domestic company in any previous year
includes any income by way of dividends from any other domestic company
or a foreign company or a business trust, there shall, in accordance with and
subject to the provisions of this section, be allowed in computing the total
income of such domestic company, a deduction of an amount equal to so much
of the amount of income by way of dividends received from such other domestic
company or foreign company or business trust as does not exceed the amount of
dividend distributed by it on or before the due date.
(2) Where any deduction, in respect of the amount of dividend distributed by the
domestic company, has been allowed under sub-section (1) in any previous year,
no deduction shall be allowed in respect of such amount in any other previous
year.
2. Taxation of Income from Dividend & Deemed Dividend 2 |
Explanation.—For the purposes of this section, the expression "due date" means
the date one month prior to the date for furnishing the return of income under
sub-section (1) of section 139.
SECTION 115A
Tax on Dividends in the case of Non-Residents and Foreign Company
Dividends shall be taxable @ 20%.
(Discussed in International Taxation)
SECTION 194
TDS on Payment of Dividends to Residents
The principal officer of an Indian company or a company which has made the
prescribed arrangements for the declaration and payment of dividends (including
dividends on preference shares) within India, shall, before making any payment in
respect of any dividend or before making any distribution or payment to a shareholder,
who is resident in India, of any dividend within the meaning of section 2
(22)(a)/(b)/(c)/(d)/(e), deduct from the amount of such dividend, income-tax at the rate
of 10%:
Provided that no such deduction shall be made in the case of a shareholder, being an
individual, if—
(a) the dividend is paid by the company by any mode other than cash; and
(b) the amount of such dividend or, as the case may be, the aggregate of the
amounts of such dividend distributed or paid or likely to be distributed or paid
during the financial year by the company to the shareholder, does not exceed
` 5,000:
Provided further that the provisions of this section shall not apply to such income
credited or paid to—
(a) the Life Insurance Corporation of India;
(b) the General Insurance Corporation of India;
(c) any other insurer
in respect of any shares owned by it or in which it has full beneficial
interest.
SECTION 195
TDS on Payment of Dividends to Non-Residents
TDS shall be deducted @ 20%.
(Discussed in International Taxation)
3. Taxation of Income from Dividend & Deemed Dividend 3 |
♦ ANALYSIS OF TAXATION OF DIVIDEND INCOME ♦
(I) TAXABILITY OF DIVIDENDS IN HANDS OF SHAREHOLDERS AT NORMAL
RATES
Prior to the amendments made by Finance Act, 2020, dividend income was chargeable
to Dividend Distribution Tax (DDT) or more commonly known as Corporate Dividend
Tax (CDT) at a flat rate of 15% plus applicable surcharge and cess. Accordingly, the
dividend income was exempt in the hands of the recipient shareholders under section
10(34). However, Finance Act, 2020 has shifted the incidence of charge of tax on
dividend income in the hands of recipient shareholders, thereby making the provisions
of DDT/CDT redundant w.e.f. 01.04.2020. Therefore, w.e.f. A.Y. 2021-22, dividend
income shall be chargeable to tax in the hands of recipient shareholders at the
normal tax rates.
(II) SURCHARGE ON DIVIDEND INCOME RESTRICTED TO 15%
As per the Finance Act, 2020, in case of individuals and HUF, the surcharge on
dividends and capital gains referred to in section 111A/112A shall not exceed 15% . The
Finance Act, 2020 provides as under:
Where total income includes Capital Gains referred to in section 111A and
/or section 112A and/or DIVIDEND INCOME then surcharge shall be as
under:
TOTAL INCOME SURCHARGE
(i) Does not exceed ` 50 lakhs No surcharge
(ii) Exceeds ` 50 lakhs but does not exceed ` 1 crore 10% surcharge on
income tax
(iii) Exceeds ` 1 crore but does not exceed ` 2 crores 15% surcharge on
income tax
(iv) Exceeds ` 2 crores
A. On tax computed on Capital Gains under section
111A & 112A and dividend income
15%
B. On tax computed on
Total Income – Capital Gains under section
111A & 112A and dividend
income
If Total Income – Capital Gains under section
111A & 112A and dividend
income
(a) is upto ` 2 crores 15%
(b) is above ` 2 crores but upto ` 5 crores 25%
(c) is above ` 5 crores 37%
Illustration:
Determine the tax liability of Mr A (aged 42 years) for the A.Y. 2021-22 in following
cases:
Particulars Case 1 Case 2 Case 3 Case 4
Dividend Income 30,00,000 40,00,000 95,00,000 49,00,000
Capital Gain u/s 111A 10,00,000 20,00,000 55,00,000 3,00,000
4. Taxation of Income from Dividend & Deemed Dividend 4 |
Capital Gain u/s 112A 14,00,000 15,00,000 8,00,000 8,00,00,000
Other income 1,26,00,000 2,25,00,000 70,00,000 6,59,00,000
Total Income 1,80,00,000 3,00,00,000 2,28,00,000 15,11,00,000
Answer:
Assessment Year 2021-22
Particulars Case 1 Case 2 Case 3 Case 4
Tax on Capital Gain u/s
111A @ 15%
1,50,000 3,00,000 8,25,000 45,000
Tax on Capital Gain u/s
112A @ 10%
1,30,000 1,40,000 70,000 79,90,000
Tax on other income
including dividend income
44,92,500 77,62,500 47,62,500 2,10,52,500
47,72,500 82,02,500 56,57,500 2,90,87,500
Surcharge on income tax
(See working Note)
7,15,875 18,89,455 8,48,625 86,74,130
Income-tax and Surcharge 54,88,375 1,00,91,955 65,06,125 37,761,630
Add: 4% cess 2,19,535 4,03,678 2,60,245 15,10,465
Tax liability 57,07,910 1,04,95,633 67,66,370 3,92,72,015
Tax liability (Rounded off
u/s 288B)
57,07,910 1,04,95,630 67,66,370 3,92,72,100
Working Note: Computation of surcharge
Particulars Case 1 Case 2 Case 3 Case 4
Total Income (excluding
dividend income and
income u/s 111A and
112A)
1,26,00,000 2,25,00,000 70,00,000 6,59,00,000
Total Income (including
dividend income and
income u/s 111A and
112A)
1,80,00,000 3,00,00,000 2,28,00,000 7,19,00,000
Applicable surcharge rate 15%
25%
15%
37%
subject to a
maximum
of 15% on
dividend
income &
income u/s
111A/112A
subject to a
maximum of
15% on
dividend
income &
income u/s
111A/112A
Surcharge on tax on:
Income u/s 111A @ 15% Since the
total income
exceeds ` 1
crore but is
less than `
2 crores,
surcharge
shall be
45,000 1,23,750 6,750
Income u/s 112A @ 15% 21,000 10,500 11,98,500
Dividend income –
40,00,000
×77,62,500 ×15%
2,65,00,000
1,75,755
49,00,000
×2,10,52,500 ×15%
7,08,00,000
2,18,554
5. Taxation of Income from Dividend & Deemed Dividend 5 |
Balance income @ 15%
(including dividend income)
@ 15% of
income tax
` 47,72,500
i.e., `
7,15,875.
7,14,375
2,25,00,000
×77,62,500 ×25%
2,65,00,000
16,47,700
6,59,00,000
×2,10,52,500 ×37%
7,08,00,000
72,50,326
Total 7,15,875 18,89,455 8,48,625 86,74,130
(III) DETERMINATION OF PREVIOUS YEAR IN WHICH DIVIDEND IS TAXABLE IN
HANDS OF SHAREHOLDERS
AS PER SECTION 8:
Any deemed dividend under section 2(22)(a)/(b)/(c)/(d)/(e) shall be deemed
to be the income of the previous year in which it is so distributed or paid,
by the company.
Any final dividend declared by a company shall be deemed to be the
income of the previous year in which it is so declared at the AGM.
Any interim dividend shall be deemed to be the income of the previous
year in which it is received by the shareholders.
(IV) ALLOWABILITY OF EXPENSES FROM DIVIDEND INCOME
As per proviso to section 57, while computing dividend income, a deduction on account
of interest expense is allowed subject to a maximum limit of 20% of the dividend
income before such deduction. No expense except the above interest expense shall
be allowed from Dividend Income.
Illustration:
Mr. X invested in shares and received dividends during the year at various dates as
under:
Date of
Receipt
Scrip Nature of
Dividend
Amount of Dividend
(`)
27-06-2020 GAIL Final 1,75,000
25-08-2020 TCS Final 82,000
12-09-2020 ONGC Final 2,34,000
15-09-2020 BHEL Final 98,000
27-11-2020 Cipla Interim 2,73,000
02-02-2021 NTPC Interim 1,69,000
To earn the dividend income Mr. X spent ` 67,000, as interest on borrowed funds
towards investment in shares during the year. He also incurred ` 1,00,000 as collection
charges of dividend. Mr. X also earned the following incomes:
Rent received from House located in South Delhi – ` 6,00,000
Income from business (Computed) – ` 3,60,000
Compute the total tax payable by him for the Assessment Year 2021-22.
6. Taxation of Income from Dividend & Deemed Dividend 6 |
Answer:
Computation of Income and Tax Liability of Mr. X
Assessment Year 2021-22
Particulars Details Amount (`)
Income under the Head House Property
Rent Received 6,00,000
Less: 30% under section 24(a) 1,80,000 4,20,000
Profits and Gains of Business or Profession 3,60,000
Income from other sources
Income from dividends (See Note 2) 9,64,000
Total Income 17,44,000
Total Tax 3,35,700
Add: Health & Education Cess @ 4% 13,428
Tax Payable 3,49,128
Note 1: It is assumed that assessee has not opted for section 115BAC.
Note 2: Dividend income = ` 10,31,000. As per proviso to section 57, limit for deduction
of interest expense shall be 20% of ` 10,31,000 i.e., ` 2,06,200. But the actual interest
expense is ` 67,000 and therefore only ` 67,000 shall be allowed as deduction.
(V) DEDUCTION UNDER SECTION 80M IF COMPANY RECEIVING DIVIDEND
DISTRIBUTES DIVIDEND ONE MONTH PRIOR TO THE DUE DATE OF
FILING OF RETURN
As per section 80M, where the gross total income of a domestic company includes
dividends from:
another domestic company
a foreign company
a business trust.
a deduction of an amount equal to the dividend distributed by the domestic company
on or before the due date i.e., one-month prior to the due-date of furnishing of return
of income under section 139(1) shall be allowed from the gross total income.
KEY NOTES
(a) Deduction is available only to a domestic company
(b) Deduction shall be allowed only if the dividends are distributed and not just
declared on or before the due-date.
(c) As per Section 80A(2), the deduction under section 80M shall not exceed the
amount included in gross total income.
To illustrate, let’s say a domestic company A Pvt. Ltd. received dividends of `
1,00,00,000 from another domestic company X Pvt. Ltd. for the year ended
31.03.2021. Also, A Pvt. Ltd. has incurred interest expense of ` 30,00,000
towards borrowed funds for the purpose of investing in shares of X Pvt. Ltd. Let
us also say, that A Pvt. Ltd. declares and distributes a dividend of ` 90,00,000
to its shareholders on or before 30.9.2021.
Accordingly, tax liability of A Pvt. Ltd. shall be as under:
7. Taxation of Income from Dividend & Deemed Dividend 7 |
Particulars Amount (`)
Income from Other Sources
Dividend Income 1,00,00,000
Less: Deduction as per proviso to section 57 20,00,000 80,00,000
Gross Total Income 80,00,000
Less: Deduction under section 80M 80,00,000
TOTAL INCOME NIL
(d) Section 115BBD provides for tax @ 15% on dividend received from specified
foreign companies. The section overrides the entire Act and provides that no
deduction shall be allowed in respect of any expenditure or allowance under any
provision of the Act. However, Section 80M is neither an expenditure nor an
allowance. Accordingly, benefit of deduction under section 80M shall be
allowed for the dividend income taxable under section 115BBD also.
Illustration 1:
Holding Company H holds 100% shares of subsidiary Company S1. Company S1
holds 50% shares of Company S2. Company S2 holds 35% shares of Company
S3. Company S3 holds 35% shares of Foreign Company F4. Assume that no
interest expense has been incurred by any of the companies. In all cases, the
dividends have been distributed on or before 30.9.2021.
(` in crores)
F4 S3 S2 S1 H Public
Dividend
paid
1,100 800 700 600 500
Deduction
allowable
u/s 80M
N.A. 800 700 600 500 –
Taxable
income
– 300 100 100 100 500
@15%
u/s
115BBD
Taxable at applicable rates (30%/25%/22%)
Illustration 2:
X Ltd. furnishes the following details for the A.Y. 2021-22.
Manufacturing Income 500 lakhs
Dividend Income received from:
Particulars A Ltd.
(Indian
Co.)
Mutual
Fund
B Inc.
[Foreign Co.
(10% holding)]
C Inc.
[Foreign Co.
(45% holding)]
Dividend received 100 lakhs 20 lakhs 30 lakhs 50 lakhs
Collection
charges
5 lakhs 4 lakhs 2 lakhs 3 lakhs
Interest on
Borrowed Funds
30 lakhs 7 lakhs 20 lakhs 15 lakhs
Other expenses 2 lakhs 1 lakh 1.5 lakhs 1 lakh
X Ltd. declared a final dividend of ` 150 lakhs on 12th August, 2021. It
distributed the same on 30th September, 2021.
Compute the tax liability for X Ltd.
8. Taxation of Income from Dividend & Deemed Dividend 8 |
Answer:
As per proviso to Section 57, no deduction shall be allowed from dividend
income, other than deduction on account of interest expense.
Accordingly, collection changes or other expenses shall not be allowed to
be deducted from the dividend income.
It is given that X Ltd. holds 45% shares in C Inc. Accordingly, as per
Section 115BBD, C Inc. is a specified company (a company in which the
Indian company holds 26% shares or more). Such dividend income shall be
taxable at the rate of 15% (plus applicable surcharge and cess) and no
deduction for any expenditure or allowance shall be allowed from such
income, as per section 115BBD.
Therefore, collection charges, interest expense and other expense incurred
towards earning dividend income from C Inc. shall be disallowed.
Further, the proviso to section 57 restricts the allowance of the interest
expense upto 20% of the dividend income. Accordingly, interest to be
disallowed shall be calculated as under:
Total interest expense = ` 30 lakhs + ` 7 lakhs + ` 20 lakhs
= ` 57 lakhs
Total dividend income = ` 100 lakhs + ` 20 lakhs + ` 30 lakhs
= ` 150 lakhs
20% of dividend income = ` 150 lakhs × 20%
= ` 30 lakhs
Computation of tax liability of X Ltd. for A.Y. 2021-22.
Particulars Amount
(` in lakhs)
Profits and Gains of Business or Profession 500
Income from Other Sources
Dividend Income (100 + 20 + 30 + 50 – 30) 170
Gross Total Income 670
Less: Deduction under section 80M 150
Total Income 520
Tax Liability *
Tax on 500 lakhs @ 22% assuming that company opts for
section 115BAA
110
Tax on 20 lakhs @ 15% under section 115BBD 3
113
Add 10% surcharge 11.3
Add 4% cess 3.729
128.029
* It would be more beneficial for X Ltd. to set off the deduction under
section 80M first from the dividend income received from A Ltd., Mutual
Fund and B Inc. as dividend received from C Inc. is taxable at a lower rate
of 15%.
(e) Deemed dividend under section 2(22)(a)/(b)/(c)/(d)/(e) is also considered for
taking the benefit under section 80M.
9. Taxation of Income from Dividend & Deemed Dividend 9 |
(f) Dividend on both preference shares and equity shares shall be considered.
(VI) TDS ON DIVIDEND
Section 194 provides for a deduction of TDS at the rate of 10% on payment of dividend
to a resident shareholder
No TDS shall be deductible if resident shareholder is an individual and
(a) Dividend is paid by any mode other than cash AND
(b) Dividend amount does not exceed ` 5,000
Note: Tax has to be deducted whether dividend is on equity shares or preference
shares or dividend is deemed so under sections 2(22)(a)/(b)/(c)/(d)/(e).
(VII) DIVIDEND EXEMPT UNDER ANY OTHER SECTION WILL CONTINUE TO BE
EXEMPT
Finance Act, 2020 has shifted the incidence of tax on dividends on the recipient
shareholders from the payer companies. Accordingly, exemption granted to such
recipients earlier by Section 10(34) has been withdrawn. However, such dividend
income shall continue to be exempt in cases where other specific provisions exist for the
exemption of dividend income.
For example, dividend income of charitable trust is exempt in its hands by virtue of
Section 11 and 12. Dividend income received by Mutual Fund is exempt under section
10(23D).
Similarly, dividend received by a business trust from SPV is exempt under section
10(23FC).
(VIII) SET OFF OF BUSINESS LOSS AGAINST DIVIDEND INCOME FROM SHARES
HELD AS STOCK-IN-TRADE
Even where the shares are held as stock-in-trade, the dividend income on such shares
shall be taxable under the head ‘Income from Other Sources’. However, for the
purposes of set off or carry forward of business losses, dividend income shall be deemed
as ‘Income under the head P/G/B/P. This was held in the case of Western States
Trading Co. Pvt. Ltd. v/s CIT (SC) (1971).
To illustrate, let’s say Mr. A holds shares as stock in trade and he has earned dividend
income of ` 10,00,000 in A.Y. 2021-22. He also has brought forward business loss from
A.Y. 2017-18 of ` 9,00,000 which can be carried forward upto A.Y. 2025-26 and can be
set off against P/G/B/P income only. Dividend income is taxable under the head
‘Income from Other Sources’.
Supreme Court held that Section 57 provides for the head of taxability of the dividend
income but for all practical purposes where the dividend income is from shares held as
stock-in-trade, such dividend income shall be deemed as Income under the head
P/G/B/P. Accordingly, business loss of ` 9,00,000 shall be allowed to be set-off
from the dividend income of ` 10,00,000.
10. Taxation of Income from Dividend & Deemed Dividend 10 |
(IX) TAXATION OF DIVIDEND INCOME IN HANDS OF NON-RESIDENT AND
FOREIGN COMPANY
As per Section 115A, dividend income shall be taxable at the rate of 20% in the hands
of non-resident (not being a company) or a foreign company. Accordingly, Section 195
provides for a deduction of 20% of dividend paid to such persons.
(X) TRANSITIONAL PROVISIONS
Section 10(34) provided for exemption of dividend income in the hand of recipient prior
to Finance Act, 2020. In light of the amendments, proviso has been inserted in section
10(34) as follows:
Provided further that nothing contained in this clause shall apply to any income
by way of dividend received on or after the 1st day of April, 2020 other than the
dividend on which tax under section 115-O and section 115BBDA, wherever
applicable, has been paid;
Where any interim dividend is declared by a company on or before March 31, 2020 and
it is received by the shareholder after March 31, 2020, it would not be taxable in the
hands of the shareholder where the company has paid DDT under section 115-O AND
the shareholder has paid tax, if any, under section 115BBDA.