Hi - I have one query. Transfer of profit to reserves rules, 1975 requires specified percetage of profit to be transferred to reserves in case dividend exceeds specified percentage. My query is how this percentage should be calculated, does this includes DDT. Please also specify the basis for inclusion/exclusion.
Help is required urgently.
regards
Dear Hardeep,
This is entirely a management call which is dependent on the following factors:-
a. availability of adequate surplus taking into consideration the left over profits.
b. market fluctuations and requirements
c. past record of the company
d. proximity and will/desire of the management for expecting better returns by paying effectively to stakeholders.
As far as the above considerations are resolved off well, the management is in a position to decide how much should be the percentage of dividend.
With thanks
CS ANIL DHIMAN
Thanks Anil for your prompt reply, my query is that when you calculate dividend % for transfer to general reserve, would you include DDT or would look at amount payable to shareholder.
As if you include transfer to general reserve percentage may change.
Dear Hardeep,
The general practice is that DDT doenot form a part of the total percentage of dividend proposed. It is exclusive of teh percentage of transfer to general reserve as well.
With thanks
CS Anil Dhiman
CAclubindia
