tds need not be deducted for dividend paid by foreign companies subject to certain conditions...one such condition is tat the amt of dividend should not exceed 2500...do we need to apply the figure each time the dividend is paid(interim dividend) or in aggregate
16 Replies
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 21 January 2010
hi swajitha,
its applicable on each payment, coz nowhere in the section, it is mentioned that its for the whole year. If there was an intention to treat it for the whole year, there would have been an express statement (as in section194J). hence an inference can be made that it is for each payment
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 21 January 2010
| Originally posted by : Mukund | ||
 |
hi swajitha, its applicable on each payment, coz nowhere in the section, it is mentioned that its for the whole year. If there was an intention to treat it for the whole year, there would have been an express statement (as in section194J). hence an inference can be made that it is for each payment |
 |
I want to correct you Mr. Mukund, TDS on dividend is deductiable if it is paid to Indian Resident and "the amount of such dividend or, as the case may be, the aggregate of the amounts of such dividend distributed during the F.Y. by the company, to the shareholder, does not exceed Rs. 2500." This is as per Section 194
CA.G.Muguntha Narayanan
(Internal Auditor at TVS Motors)
(2195 Points)
Replied 21 January 2010
ya sorry for the wrong info. shudhanshu is absolutely correct.
The principal officer of an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India, shall, before making any payment in cash or before issuing any cheque or warrant in respect of any dividend or before making any distribution or payment to a shareholder, who is resident in India, of any dividend within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) of clause (22) of section 2, deduct from the amount of such dividend, income-tax at the rates in force :
Provided that no such deduction shall be made in the case of a shareholder, being an individual, if
(a) the dividend is paid by the company by an account payee cheque; and
(b) the amount of such dividend or, as the case may be, the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, does not exceed two thousand five hundred rupees:
swajitha
(ca..final)
(68 Points)
Replied 21 January 2010
but for dividend paid by indian cos there is no need to dedect tds as it is exempt in the hands of the recepient...
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 21 January 2010
yeah you are right dividend is exempted in the hands of the shareholders but dear if TDS is deducted they(shareholders) will get the credit of TDS. The purpose of the TDS is that the government keep an eye of the income of the people from the point of its generation.
ANIL A MALAVADE
(Student )
(133 Points)
Replied 21 January 2010
There is nothing mentioned at each time but if the payment exceeds Rs 2,500. either it is Interim or Final. and if Form 15H /G as applicable to avoid TDS
swajitha
(ca..final)
(68 Points)
Replied 21 January 2010
a credit is given for tds with respect to dividend????????so u mean that dividend is first included in total income of the assessee and tax is calculated and then a tds credit is given....then it cannot be called as on income exempt in the hands of the assessee...
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 21 January 2010
Its not like that dividend income will not be considered while calculating gross income as it is exempted and TDS deducted will be considered against his total tax liabilty.
CA Pramod Jain
(manager finance)
(1577 Points)
Replied 21 January 2010
no tds needs to deducted on dividend as the companys are laible for dividend distribution tax @ 15.995% .
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 21 January 2010
| Originally posted by : CA Pramod Jain | ||
|
no tds needs to deducted on dividend as the companys are laible for dividend distribution tax @ 15.995% . | |
you are right it is from 01-04-2003 onwards in the case of dividend referred u/s 115-O
swajitha
(ca..final)
(68 Points)
Replied 21 January 2010
m clear with tat mr.pramod but wat abt the 2500 limit(in case of foreign cos no need to deduct tax if the amt of dividend is less than 2500),,is it in aggregate or individual payment....can u pls clarify
Shudhanshu Agrawal
(Business)
(2570 Points)
Replied 21 January 2010
| Originally posted by : swajitha | ||
|
m clear with tat mr.pramod but wat abt the 2500 limit(in case of foreign cos no need to deduct tax if the amt of dividend is less than 2500),,is it in aggregate or individual payment....can u pls clarify | |
It is in the agrregate and not individually
manish
(Article Assitant)
(358 Points)
Replied 21 January 2010
I have a doubt, if co. already paid the tax on dividend then why there is need for deduction of tds? Why govt keeps the revenue if it's already paid by the co as tax on dividend.? Can Anyone tell me plz
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