Penalty for Delayed payment of Dividend
This query is : Resolved
09 February 2009
If a Private Limited Co (Non Listed) wants to declare interim dividend, so what is the stipulated period to make dividend payment and suppose if the Company fails to make the Dividend payment within stipulated period what will be the penalty under Companies Act and Income Tax Act etc…
Seek experts Advise/Opinion on the above.
Seek experts Advise/Opinion on the above.
09 February 2009
Under income tax act there is no penalty but if dividend tax is not paid in time then you have pay alongwith interest.
It is serious problem under companies act, the management are liable to pay fine and if there delay without assigning any reasons for the same the courts can give judgement for imprsionment of officials also.
If you want to declare interim dividend then conduct the board meeting and results to a particular date and based on the favourable results you can declare interim divivdend.
File form 23 of Companies act to the roc and pay dividend tax and distribute dividend within 21days of passing the resolution.
It is serious problem under companies act, the management are liable to pay fine and if there delay without assigning any reasons for the same the courts can give judgement for imprsionment of officials also.
If you want to declare interim dividend then conduct the board meeting and results to a particular date and based on the favourable results you can declare interim divivdend.
File form 23 of Companies act to the roc and pay dividend tax and distribute dividend within 21days of passing the resolution.
09 February 2009
Dear Sir,
Section 205 to 207 of Companies Act very clearly says for Declaration of Dividend and Penalty clause. But one of my friend says dividend to be paid within 14 days from the date of declaration
please advise what is the maximum period for distribution of dividend from the date of declaration, is it 14, 21 or 30 days.
Section 205 to 207 of Companies Act very clearly says for Declaration of Dividend and Penalty clause. But one of my friend says dividend to be paid within 14 days from the date of declaration
please advise what is the maximum period for distribution of dividend from the date of declaration, is it 14, 21 or 30 days.
10 August 2024
Under the Companies Act, 2013, and the Income Tax Act, 1961, there are specific requirements and penalties related to the declaration and payment of dividends by companies. Here’s a detailed breakdown addressing your concerns:
### **1. **Stipulated Period for Payment of Dividend**
**Under the Companies Act, 2013:**
- **Section 123(3):** This section deals with the payment of dividends. For both interim and final dividends, the law stipulates that the dividend must be paid within **30 days** from the date of declaration.
### **2. **Penalty for Delayed Payment of Dividend**
**a. **Under the Companies Act, 2013:**
- **Section 127:**
- **Penalty for Delayed Payment:** If a company fails to pay the dividend within 30 days from the date of declaration, the company is liable to pay a penalty. The penalty amount is:
- **Company:** ₹1,000 for each day of default.
- **Officer in Default:** ₹1,000 for each day of default.
- **Additional Consequences:** Apart from penalties, the directors and officers responsible for the delay might face further scrutiny or legal actions, including potential disqualification.
**b. **Under the Income Tax Act, 1961:**
- **Section 194:** While Section 194 of the Income Tax Act requires companies to deduct tax at source (TDS) on dividends, there isn’t a specific penalty for delayed payment of dividends under the Income Tax Act itself. However, the company must ensure that TDS compliance is met to avoid additional penalties under the Income Tax Act.
### **3. **Maximum Period for Distribution of Dividend**
- **30 Days:** According to Section 123(3) of the Companies Act, 2013, the maximum period for distributing dividends, whether interim or final, is **30 days** from the date of declaration. Any delay beyond this period would attract penalties as specified under Section 127.
### **Summary and Expert Advice**
- **Stipulated Period:** The dividend must be paid within **30 days** from the date of declaration, as per Section 123(3) of the Companies Act, 2013.
- **Penalties for Delay:**
- **Company:** ₹1,000 for each day of default.
- **Officer in Default:** ₹1,000 for each day of default.
- **Consultation:** For specific scenarios or complex situations, consulting with a legal expert or a company secretary can provide tailored advice and ensure compliance with both statutory and regulatory requirements.
By adhering to these timelines and understanding the penalties for non-compliance, companies can ensure they manage their dividend payments effectively and avoid unnecessary financial penalties.
### **1. **Stipulated Period for Payment of Dividend**
**Under the Companies Act, 2013:**
- **Section 123(3):** This section deals with the payment of dividends. For both interim and final dividends, the law stipulates that the dividend must be paid within **30 days** from the date of declaration.
### **2. **Penalty for Delayed Payment of Dividend**
**a. **Under the Companies Act, 2013:**
- **Section 127:**
- **Penalty for Delayed Payment:** If a company fails to pay the dividend within 30 days from the date of declaration, the company is liable to pay a penalty. The penalty amount is:
- **Company:** ₹1,000 for each day of default.
- **Officer in Default:** ₹1,000 for each day of default.
- **Additional Consequences:** Apart from penalties, the directors and officers responsible for the delay might face further scrutiny or legal actions, including potential disqualification.
**b. **Under the Income Tax Act, 1961:**
- **Section 194:** While Section 194 of the Income Tax Act requires companies to deduct tax at source (TDS) on dividends, there isn’t a specific penalty for delayed payment of dividends under the Income Tax Act itself. However, the company must ensure that TDS compliance is met to avoid additional penalties under the Income Tax Act.
### **3. **Maximum Period for Distribution of Dividend**
- **30 Days:** According to Section 123(3) of the Companies Act, 2013, the maximum period for distributing dividends, whether interim or final, is **30 days** from the date of declaration. Any delay beyond this period would attract penalties as specified under Section 127.
### **Summary and Expert Advice**
- **Stipulated Period:** The dividend must be paid within **30 days** from the date of declaration, as per Section 123(3) of the Companies Act, 2013.
- **Penalties for Delay:**
- **Company:** ₹1,000 for each day of default.
- **Officer in Default:** ₹1,000 for each day of default.
- **Consultation:** For specific scenarios or complex situations, consulting with a legal expert or a company secretary can provide tailored advice and ensure compliance with both statutory and regulatory requirements.
By adhering to these timelines and understanding the penalties for non-compliance, companies can ensure they manage their dividend payments effectively and avoid unnecessary financial penalties.
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