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Dividend income

12 October 2019

Is dividend income received from Indian company by non-resident credited directly to his bank account in France taxable in India?

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13 Replies

Suresh Thiyagarajan (Student) (3986 Points)
Replied 12 October 2019

1. Dividend received from the domestic company is exempt from payment of tax u/s 10(34) subject to limit specified u/s 115BBDA of Rs.10,00,000.
2. If an assessee is in receipt of dividend in excess of Rs. 10,00,000 during the year then dividend received in excess of Rs. 10,00,000 alone will be subject to tax @ 10%.
3. The above provision will equally be applicable for Non-residents.
4. In your case, dividend income credited directly to his bank account will not be subject to tax in India.
Please correct me if the above solution has an alternative view.

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Dhruv Shah (Article Student) (357 Points)
Replied 12 October 2019

Yeah! Dividend received from Indian Companies upto Rs. 10,00,000 is exempt! So, Dividend received in your case shall be exempt provided it is upto Rs. 10,00,000.

sabyasachi mukherjee (27574 Points)
Replied 12 October 2019

@ Akshat
Dividend received from Indian company credited to his bank account in france
This entirely depends on the incidence of tax.

Dhruv Shah (Article Student) (357 Points)
Replied 12 October 2019

Dividend received from Indian Company shall be treated as Indian Income ! that's why it will be taxable but subject to Section 115BBDA!

sabyasachi mukherjee (27574 Points)
Replied 12 October 2019

But it is upto Rs.1000000 hence exempted .

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Dhruv Shah (Article Student) (357 Points)
Replied 12 October 2019

YES , You are right Sabyasachi but the query raised by Akshat has not mentioned the Amount of Divided! That's why I told that it would be taxable but subject to Exemption limit specified in Section 115BBDA!

sabyasachi mukherjee (27574 Points)
Replied 12 October 2019

Yes subject to exemption limit specified u/sec 115BBDA.

Koushik Das (Self employed) (40 Points)
Replied 13 October 2019

Dividend received by a non resident from Indian company is exempt from tax. sec 115BBDA applies to individual. therefore, if the Non resident is an individual he will have to pay tax at the rate of 10% on the amount of dividend in excess of 10lac. but in case of company, 115BBDA does not apply. In case of company, It will be fully exempt.

Dhruv Shah (Article Student) (357 Points)
Replied 13 October 2019

Hey ! Recently I've got to know that 115BBDA does not apply to Non-Resident!s. Means in this case dividend received from Indian comoany by Non Resident Indian will be exempt in full!

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Suresh Thiyagarajan (Student) (3986 Points)
Replied 13 October 2019

1. Yes, sec 115BBDA has specifically mentioned that dividends will be exempted only up to Rs. 10,00,000 only for the resident assessee.
2. By going by this wordings, it may not be applicable to non-resident and in return, entire amount of dividend received from the domestic company by a non-resident will be exempted from payment of tax.
Please correct me if the above solution has an alternative view.

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Koushik Das (Self employed) (40 Points)
Replied 13 October 2019

I agree with you completely. The benefits of Sec. 115BBDA is available to specified assessee who is resident in India.

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Darshan Jain (CA) (137 Points)
Replied 13 October 2019

Agree with @ Dhruv Shah. Furthermore, the second proviso to S. 195 states that no deduction is required to made in respect of dividends referred u/s. 115-O. Thus, even if 115BBDA would have been applicable to NR, deduction would not have been required.

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