Treatment of chit dividend under i t act

This query is : Resolved

CHIDANAND MATTIHALLI (Querist)
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27 August 2013 Assessee took margadershi chit for Rs. 25,00,000 making monthly payment less than the amount.the diffrence of this monthly chit amount is taxable as chit dividend income please advise the tax treatment.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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27 August 2013 Yes, such dividend income is taxable under the head Income from other sources for IT purpose.

For this you have to two options.

1) Is offering dividend income on accrual basis

2) Is offering either profit on chit or loss on chit in the year of chit closed
Profit/loss = Actual amount paid - Net amount received from the Company at the time of chit auctioned.

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