Dividend from foreign com.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 November 2017 Please advise what is the liability of Indian com. on the dividend received from shri lanka com, do note shri lanka com. has paid income tax and dividend tax already. Is there a double tax relief ?

reply urgently

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 November 2017 Dividends are charged to tax under the head “Income from other sources” and hence dividend received from a foreign company is charged to tax under the head “Income from other sources”. Dividend received from foreign company will be included in the total income of the taxpayer and will be charged to tax at the rates applicable to the taxpayer.
Relief from double taxation
Dividend received from a foreign company is charged to tax in India as well as in the country to which the foreign company belongs. If the foreign dividend has suffereddouble taxation, then the taxpayer can claim double taxation relief either as per the provisions of Double Taxation Avoidance Agreement (if any) entered into with that country (if any) by the Government of India or can claim relief as per section 91 (if no
such agreement exists).
By virtue of section 115BBD, dividends [as defined in section 2(22) except dividend as defined in section 2(22)(e)] received by an Indian company from a foreign company in which the Indian company holds 26% or more in nominal value of the equity share capital is charged to tax at a flat rate of 15% (plus surcharge and cess as applicable).

Querist : Anonymous

Querist : Anonymous (Querist)

18 November 2017 sir, as per my research DTAA relief dividend income above not available Article 10 of dividend income.

ARTICLE 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 7.5 per cent of the gross amount of the dividends. The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 November 2017 Refer article 24
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