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Tax on dividend by Private Limited

Lila (Job) (524 Points)

30 August 2023

A private limited company is declaring dividend out of profit of last 2 years. My query is:

1. Is it allowed to declare dividend from accumulated profit.

2. Does the company need to pay any tax on it.

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5 Replies

sabyasachi mukherjee (27835 Points)
Replied 30 August 2023

Obviously out of accumulated profit
yes you need to pay tax on it.

1 Like

Eswar Reddy S (CFO- at NHTF) (58275 Points)
Replied 30 August 2023

1. Yes it is allowed to declare dividend from accumulated profits ( Reserves / P & L credit balance in balance sheet)

2. Tds provisions are applicable for dividend

Lila (Job) (524 Points)
Replied 31 August 2023

Does the company have to pay any taxes (DDT has been abolished)...Or just need to deduct TDS..

mjami wisdo (2 Points)
Replied 31 August 2023

@ just fall
Dividends tax is withheld by the company declaring the dividend on behalf of the shareholder receiving it. In specie dividends are subject to tax in the hands of the company and not the beneficial owner.