Dividend distribution Tax

Tax queries 1948 views 3 replies

kavita Rathi

Manager Finance

35 Points Joined February 2009

Dear Members,

Pls advise me on the below mentioned subject with some documentry reference if available.

The case is as follows:

There is an ABC Co. which a domestic company.

This company has invested in Wholly owned subsidary at say Mauritius in the name called ABCD Ltd.

This company agin invested in XYZ Ltd incorported in say Hong Kong.

Thus XYZ is an subsidary of ABCD Ltd.

Also XYZ is an fellow subsidary of ABC Ltd.

Now, Hong Kong comany XYZ declars dividend to its shareholders and pay Dividend distribution tax.

This dividend is received by the shareholders of ABCD Ltd.

Which is in turn received by shareholders of ABC Ltd.

The question is wheather at each level of receiving dividend each company has to pay dividend distribution tax?

Pls advise me with some kind of reference.

Thanking you

Regards,

Kavita

Replies (3)

Sorabh Gupta

Manager ( Taxation )

877 Points Joined July 2008

Kavita

In my opinion DDT is paid by "INDIAN" company & also paid by compnay who declares dividend.

Dividend paid by indian company is exempt in the hands of shareholder bcoz company who declares the DDT is liable to pay DDT .

Dividend declare by foreign company is taxablr in the hands on shareholder .....

kavita Rathi

Manager Finance

35 Points Joined February 2009

Thanks for your support.

Regards,

Kavita

Ram kr.

Buisness

883 Points Joined November 2008

Dear Friends,

We have a Gratuity Trust and contributed Gratuity contribution in every year according to as-15. we have invested Trust income in various mutal fund & fixed deposit and received dividend and interest. Can these income is taxable under section 2(15) Trust Act.