A company distributed deposit certificates (without interest) to its shareholders. What is the taxability of Shareholder?
Whether it is taxable to shareholder or it is exempt?
1. Firstly, deposit certificates are issued by banks that are authorized by the RBI. A company as such cannot issue a deposit certificate.
2. And certificate of deposits is issued by banks for holding customers deposit and in return provide interest at a predetermined rate.
3. Hence, make sure whether the company has actually issued a deposit certificate to its shareholders. Because companies do get deposits like a chit fund for 11 months and issue a certificate to this effect. However, even the same is not considered a deposit certificate.
Please correct me if the above solution has an alternative view.
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