DIVIDEND BY COS

Dividends can only be distributed out of undistributed profits.

Now No Dividend Distribution Tax ,So it's in hand of shareholder but co has to deduct TDS @ 10% if dividend payable is more than Rs 5,000...

Yes ,It's recommend to declare from current year undistributed profits after setting off past losses ,but can also be distributed from py surplus and any surplus transferred to Free reserves ,subject to conditions on withdrawal...and setting off cy loss or unabsorbed depreciation..