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dividend distribution tax

Rachit (Analyst) (913 Points)

27 April 2010

A company intends to pay dividend for the FY ending 31/03/2010, in June 2010.What is the applicable Div Distribution tax Rate ?

@ 16.995% or @ 16.60875%

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6 Replies

DT Fundas - Tarun rustagi ( Author) (1150 Points)
Replied 27 April 2010

dear rachit

company will liable to pay tax at the rate of 16.995%.bcoz company continue to be liable to pay surcharge if his total income exceeds 1crore according to finance act2009

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Amir (Learner) (4016 Points)
Replied 27 April 2010

Dear Rachit,

For Dividend Tax Purposes, the year to which it pertains is not relevant. It is a current item & hence rate prevailing at the earliest of the event shall be applicable -

(a) declaration of any dividend; or

(b) distribution of any dividend; or

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 27 April 2010

So rate idaelly should be 16.60875% as surcharge for the year is 7.5% on corporates.

manikandan.J (Accounts Manager) (363 Points)
Replied 27 April 2010

DDT @ 16.995%

15%+1.5% of surcharge +3% cess

and also make the provision for general Reserve not exceeding 10% of profit

DT Fundas - Tarun rustagi ( Author) (1150 Points)
Replied 27 April 2010

dear aditya sir

div. dis tax rate how can be 16.60875%.bcoz the com. makes declaration in f/y 2009-10 itself.

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Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 28 April 2010

See Tarun dividend is to be distributed though for F. Y. 2009 - 10 the declaration for the same will be in June 2010 probably in the AGM and hence the rate of surcharge applicable at that date would be 7.5% the rate prevailing at that time.

Also if you remember the rates of DDT was changed w. e. f. 01.04.2007 from 12 to 15 % and all the companies which declared dividend in the AGM though for F. Y. 2006 - 07 paid DDT @ 15% and not 10%