Vaibhav Agrawal (MD) (58 Points)
09 March 2010Dear Sir,
I have following questions:-
1. Can a Pvt Ltd company declare Dividend to its share holder?
2. Will dividend shall be counted as profit of company for Income tax purpose?
3. Dividend can be paid from Profit before tax or Profit after Tax?
4. What are the taxes applicable & there rate (Dividend Distribution Tax etc.)?
5. Is there any limit / % of profit can be distributed as dividend?
Thanks in advance for your help.
regards,
Vaibhav
Rasesh
(CS CWA MBA (Fin) B.Com LL.B (Spl))
(6501 Points)
Replied 10 March 2010
1. Can a Pvt Ltd company declare Dividend to its share holder? - Yes
2. Will dividend shall be counted as profit of company for Income tax purpose? - The question is not clear. Dividend paid by the Company has no impact in IT
3. Dividend can be paid from Profit before tax or Profit after Tax? - PAT
4. What are the taxes applicable & there rate (Dividend Distribution Tax etc.)? - DDT - basic 15% + surchage + ed cess + hr ed cess
5. Is there any limit / % of profit can be distributed as dividend? - Refer to your Articles. In the Act, there is no limit. don't forget to transfer to GR in case dividend rate exceeds 10%, as per the Companies (Transfer of Profits to GR) Rules.
Rasesh
(CS CWA MBA (Fin) B.Com LL.B (Spl))
(6501 Points)
Replied 10 March 2010
1. Can a Pvt Ltd company declare Dividend to its share holder? - Yes
2. Will dividend shall be counted as profit of company for Income tax purpose? - The question is not clear. Dividend paid by the Company has no impact in IT
3. Dividend can be paid from Profit before tax or Profit after Tax? - PAT
4. What are the taxes applicable & there rate (Dividend Distribution Tax etc.)? - DDT - basic 15% + surchage + ed cess + hr ed cess
5. Is there any limit / % of profit can be distributed as dividend? - Refer to your Articles. In the Act, there is no limit. don't forget to transfer to GR in case dividend rate exceeds 10%, as per the Companies (Transfer of Profits to GR) Rules.
Vaibhav Agrawal
(MD)
(58 Points)
Replied 11 March 2010
Thanks very much for your help. I understand from your reply, aAs dividend is being paid from PAT, it does not make sense to pay dividend if all company share holders are family members. As it is attracting dual taxation.
thank you again for sparing time for my query.
best regards,
CAclubindia
