Ddt u/s. 1150 as per finance act 2015

What is the formula for arriving basic rate of DDT 17.647%? When the Act says DDT is (15% basic rate+ 12%surcharge+3%cess). Also effective rate is 20.358%. How the grossing up is also done? Iam confused!!! I would be grateful if some body can clarify this.

Regards, Arjun Rajagopal

 

Replies (5)

For grossing up purposes, the dividend tax u/s 115-O(1) will be considered ignoring the impact of surcharge and education cess. The formula for grossing up as given in newly inserted section 115-O(1B) is as follows:

Dividend or distribution tax rate before surcharge and education cess = Amount distributed X t / (100 – t)

t = Tax rate given under section 115-O(1).
Amount distributed = Dividend payable – Dividend received from subsidiary company in the same financial year.

 

In view of the amendments made by inserting the new provisions for grossing up under sub-section (1B) of the Section 115-O of the Act (w.e.f. 1-10-2014), the tax on distributed profits of domestic companies to be levied on the gross amount of dividend and not on net amount of dividend distributed as per the above formula. For example, if ₹ 20,000/- is to be distributed to the share holders, the dividend distribution tax would be –

 

16.995

 

20000 X

 —————-

 = ₹ 4095

 

83.005

 
 

And not ₹ 3400/– (20000 X 16.995)

Thank You so much Satish sir. Now the concept is well clear.

I want summary of Case laws DT and IDT for May 16

SUMMARY OF CASE LAWS CAN BE DOWNLOADED FROM FOLLOWING LINK

 

https://drive.google.com/file/d/0B00LMJRUJ6qPY21pVlpDOUk5MlE/view?usp=sharing

You can check the select case laws published by the Institute for May 2016 Examination from the below link:

Direct Tax - https://www.icai.org/post.H T M L?post_id=10170

Indirect Tax - https://www.icai.org/post.H T M L?post_id=10173

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