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Dividend received from mauritius subsidiary

pratik shah (CA,CS) (92 Points)

20 June 2012

Whether Dividend received from Mauritius Subsidiary by Indian Holding company is taxable in India?

What are relevant section applicable?

Please share your views.

Thanks.

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2 Replies

shankar (CA, CS Final) (243 Points)
Replied 20 June 2012

Hi Prateek,

Dividend income paid to a non-resident by Indian company is deemed to accrue in India only on payment and not on declaration -

Under section 9(1)(iv), it is clearly stipulated that a dividend paid by an Indian company outside India will constitute income deemed to accrue in India on effecting such payment. In section 9(1)(iv), the words used are ‘a dividend paid by an Indian company outside India’.

This is in contradistinction to section 8 which refers to a dividend declared, distributed or paid by a company. The words ‘declared or distributed’ occurring in section 8 do not find place in section 9(1)(iv).

Therefore, it is clear that dividend income paid to a non-resident is deemed to accrue in India only on payment and not on declaration - Pfizer Corporation v. CIT [2003] 259 ITR 391/129 Taxman 459 (Bom.).

Thanks

With regards

Shankar

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CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7024 Points)
Replied 22 June 2012

Pratik,

Kindly have a look at sec. 115BBD, which provideds for taxation of such dividend income @ 15% provided the Indian Company holds more than 26% share in Mauritius Company.

Anuj

femaquery @ gmail.com

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