Payment by a company to whom
- to Equity shareholder holding 10% or more
- to any "concern" in which "Equity shareholder holding 10% or more" has "substantial interest" (i.e. a beneficial owner of 20% or more of the concern's income"
- to anyone on behalf of "Equity shareholder holding 10% or more".
(Any subsequent repayment / adjustment against remuneration / rent etc. is immaterial. Such payment will still be taxed)
How much will be treated as a dividend?
- To the extent of accumulated profits (accumulated profits calculated till the date of payment)
When is it taxed?
- The payment is taxed in the year of payment.
Any exception to section 2(22)(e)
- Any payment by NBFC as loan or advance in ordinary course of business
Taxability in hands of Company
- Nil (Section 115(0) has been amended effective 1-4-20 and dividend distribution tax is not applicable from 1-4-20 (including tax on deemed dividend).
Taxability in hand of shareholder
- Dividend is taxable u/s 56 in hands of shareholder from 1-4-20 and exemption u/s 10(34) has been removed.
CAclubindia
