cash flow statement

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2010 how do we treat the following item in cash flow statement?
company paid a propsed dividend of Rs100000 & also a tax on dividend(TDS) @ 25%..
how do we treat it in both situations:
1. when no other tax is given in the ques.
2. when provision for tax(opening ,closing & in P& L),advance tax( opening ,closing) are given

Ashok Malhotra

Ashok Malhotra (Expert)
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04 July 2010 Dividend Distribution Tax (not TDS) and dividend are not treated as expenses. These two items are paid out of distributable part of the profit and they effects the cash flow of the company. Hence iit should treated as " Cash Flow from Financing Activities"

Normally Balance in "Provision for Tax" refers to Income tax payable by the company on the net profit as per the Income Tax Act 1961. Any payment of such tax is an operating activities and should be shown under the head as " cash Flow from Operation". However, it is shown as seperate sub-head under operation as its is significant figures

CA Ashok K Malhotra (FCA)

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Querist : Anonymous

Querist : Anonymous (Querist)

05 July 2010 thankyou for your response CA Ashok K Malhotra (FCA)sir,so do you mean we show dividend net of Dividend distribution tax? and DDT has nothing to do with Cash flow from operating activities??
thankyou

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Ashok Malhotra

Ashok Malhotra (Expert)
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05 July 2010 Sum total of Dividend and DDT are subtracted from distributable profit. DDT is calculated based on the percentage of dividend declared and paid (not like TDS)

CA Ashok K Malhotra (FCA)