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Dividend distribution tax

NAVEEN KUMAR ANDHAVARAPU (FINANCE) (96 Points)

13 May 2015

What is the dividend tax rate(base rate, surcharge and eduction cess) for the fy 2015-16 and ay 2016-17?

While computing grossing up, only consider on base rate and total.

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12 Replies

Joswin Punchakunnel (Chartered Accountant) (314 Points)
Replied 13 May 2015

DDT shall be computed on the amount determined after grossing up dividend paid by the rate of tax (excluding Surcharge and Cess) on such dividend.

Grossing up needs to be done only of the Basic Rate and not of the Effective Rate. The rates of DDT are as below:

Basic Rate 17.647

Effective Rate 20.358 (ie 17.647+12% surcharge+3%cess)

2 Like

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P.C. Joshi (service) (274 Points)
Replied 14 July 2015

1. Does it mean that a companyhas to pay tax twice first corporate tax on total net profit and then divident tax on the amount declared as dividend?

2. The amount available for dividend will be after tax?

For example

Net Profit Before Tax 100 lacs

Corporate tax say 30% 30

PAT 70 lace

proposed dividend 10 lacs

Dividend tax say @ 17% 1.70

Amount available for distribution to shareholders 8.30 Lacs

Is my understanding correct?

Regards,

P.C. Joshi

SachiN Gupta (ARTICLE) (21 Points)
Replied 13 October 2015

agreed with

Joswin Tony

sadasivareddy (Employee) (78 Points)
Replied 20 November 2015

Ner Profit 100

Corporate Tax 30

Net I ncome 70

Praposed Dividend 10

Dividend Distribution Tax Calculation

10*100/85 = 11.7647

Tax @ 15% = 1.7647

Sur @ 12% = 0.2117

Total = 1.9764

E.Cess @ 3% = 0.0592

Total DD Tax = 2.0358

Effective Rate is 20.358%

2 Like

Manish J. Sheth (Proprietor) (21 Points)
Replied 03 December 2015

Refer WIRC Reference manual 2015-16 page no. 3.68 which they say on 20000 dividend to be distributed actuall you have to dedcut tax of Rs4285.85/- which is not matching above formula..

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Mitesh Chheda (Practise) (31 Points)
Replied 04 March 2016

But the Basic rate mentioned in the Act is 15% , can u please give the reference how you got 17.647%

T.S.CHANDRASEKARAN (CHARTERED ACCOUNTANT) (60 Points)
Replied 23 March 2016

dividend 100

tax 15

net 85

rate 15/85=17.647

sridhar (M.Com) (22 Points)
Replied 28 May 2016

our company dividend distributed for Rs.85,42,443/- . Please send to us the DDT .

Thanks

Sridhar R

sridhar (M.Com) (22 Points)
Replied 28 May 2016

Originally posted by : sridhar
	our company dividend distributed for Rs.85,42,443/- . Please send to us the DDT . Thanks Sridhar R

Mitesh Chheda (Practise) (31 Points)
Replied 29 May 2016

Mr Sridhar,

The DDT on Rs.8542443 dividend, would be Rs.1739071/- As per Sec 115O sub section 3 (a) the DDT should be paid within 14 days of declaration or payment of dividend whichever is earlier.