Dividend and interest
This query is : Resolved
M Ahamed Bassam
(Querist)
21 October 2014
Can anybody tell the detailed difference between interest and dividend according to the provisions of law...?
CS Mitesh Mehta
(Expert)
21 October 2014
1. Both interest as well as dividends are liabilities of a company and it has to pay them to debtors and shareholders respectively.
2. Interest is fixed and specified in the terms and conditions of debt or bonds; dividends can vary depending upon profits of the company.
3.Interest is considered as an expense of a company and has the effect of reducing tax liability of a company when it is paid. Dividends are not an expense of a company and as such they do not reduce the net income of the company.
2. Interest is fixed and specified in the terms and conditions of debt or bonds; dividends can vary depending upon profits of the company.
3.Interest is considered as an expense of a company and has the effect of reducing tax liability of a company when it is paid. Dividends are not an expense of a company and as such they do not reduce the net income of the company.
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