Tax on distributed profits of domestic companies

Despite anything stated in any other section of this Act and in accordance with this section's rules, any amount proclaimed, distributed, or paid by a domestic firm as a dividend on or after April 1, 2003, whether from current or accumulated profits, shall be subject to additional income tax at a rate of 15%, in addition to the income tax chargeable in respect of the overall revenue of such company for any assessment year. If a domestic firm receives a dividend during the financial year from a subsidiary, the amount mentioned in the aforementioned sub-section should be decreased by that amount. Click here to know about donation under 80g.

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If the subsidiary is a domestic business, the tax due under this section on the dividend has already been paid; if the subsidiary is a foreign company, the domestic company is responsible for paying the tax due under section 115BBD on the dividend. A dividend cannot be reduced more than once by the same amount.

The dividend, if any, paid to anybody on behalf of the New Pension System Trust mentioned in section 10's clause (44) will likewise be deducted from the amount mentioned in the aforementioned sub-section. A firm will be considered a subsidiary of another business for the purposes of this subsection if the other company owns more than half of the company's nominal shares of equity.

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Any amount by way of dividends mentioned in the first sub-section that is less than the amount mentioned in the next sub-section must be increased to an amount that, after deducting the tax on the increased amount at the rate mentioned in the first sub-section, is equal to the net distributed profits in order to determine the tax on decentralised profits payable in accordance with this section. A domestic firm must pay the tax on dispersed profits outlined in the first subparagraph even though it does not owe income tax on its total income as determined in accordance with the requirements of this Act.

Within fourteen days of the date of any dividend declaration, distribution, or payment, whichever occurs first, the domestic business's senior officer and the firm are both responsible for paying the tax on dispersed earnings to the account of the Central Government. No further credit may be claimed by the business or by any other person in relation to the amount of tax thus paid. The tax on dispersed profits so paid by the company must be recognised as the last payment of tax in regard of the amount declared, distributed, or paid as dividends.

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