Income tax provision for declaring dividend

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Shamsunder Korhalkar (Querist)
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15 December 2010 Please let me know the accounting procedure of calculating income tax when a p.ltd. co. wants to declare dividend
e.g. If company earns a profit of Rs. 15.00 lacs and wants to declare a dividend for Rs. 5.00 lacs Then how the tax is calculated andwhat accounting entries will have to pass in the books of company.
on 5.00 lacs 15% Tax and on10.00 lacs 30%
or on 15.00 lacs 30% and addl. 15% on5.00 lacs ? Further the dividend amount is to be deducted from profit amount for calculating incometax ?
Kumar Korhalkar

HUZAIFA HUSSAIN

HUZAIFA HUSSAIN (Expert)
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15 December 2010 Mr.Shamsunder, Dividend will be declared from the tax paid profits. So, 30% is to be paid on complete profit of Rs.15.00 lacs and additional dividend tax is to be paid on Rs.5 lacs @ 15% + sc+ ec.

The dividend amount should not be deducted from profits for calculating income tax.

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taxindiaconnect

taxindiaconnect (Expert)
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15 December 2010 Agreed with Huzafia as the dividend distribution tax is a seaprate tax then the corporate tax. No deduction avaiable for payment of dividend from corporate taxaton.

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