Please help!!

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Priya Dharshini

CA (Final)

30 Points Posted on 20 December 2013

Hi friends! I have a doubt to the below query!

(i)A company named say "X company limited(unlisted company)" earns dividend of Rs.100/- in a year from investment in shares in a stock market and they incur expenses of Rs.60/- on account of salary, rent etc for the said year. Also it pays a dividend of Rs.20/- in that year. What is its tax liability? Also how much is its dividend distribution tax?

(ii) If it is having 51% in a subsidiary company(unlisted company) and earns dividend of Rs.100/- in a year from investment in shares in a stock market and they incur expenses of Rs.60/- on account of salary, rent etc for the said year. Also it pays a dividend of Rs.20/- in that year. What is its tax liability? Also how much is its dividend distribution tax?

Please reply at the earliest. Thanks in advance.

Replies (3)

AVIJIT

CA FINALIST

324 Points Posted on 20 December 2013

Dividend income is exempt from Income Tax, so no Income Tax is required to be paid as such but as it is a company, so you may need to pay MAT on the book profits. Further rate of dividend distribution tax is 15% + 10% surchage + 3% cess = 16.995%