Dividend distribution tax

Earlier position

if co wants to distribute RS 100 as dividend , then co deducts 16.995 as DDT and pays Balance 83.005.

But now from 1.10.2014 (Due to amendment)

Grossing up is applicable . (Institure Journal - Aug 14 :- Total tax rate after applying gross up concept will  be 20.47%).

Please solve the above example by applying the concent of gross up.

How to gross up and upon which figure the 20.47 % will be applied.

 

Thanks in advance.

Replies (4)

where have you read this?? can you provide me the link?

Originally posted by : Akanksha Jain
where have you read this?? can you provide me the link?

https://220.227.161.86/34301cajournal-aug14-8.pdf

See Point No 3

I have read the amendment. 

let me explain the new provision with an example. 

Suppose a company wants to distribute Rs. 100 as dividend

Initially (before amendment) the company deducts Rs. 14.526 (100*16.995/16.995) and distributes Rs. 85.474 as dividend. As the provision states that 16.995% of the dividend distributed.

Here, dividend distributed was Rs. 85.474 and Rs. 85.474*16.995% = Rs. 14.526

This is the provision before amendment.  

Now, after amendment if a company wants to distribute Rs. 100 as dividend it will deduct Rs.16.995 (Rs. 100*16.995%) as tax and distribute Rs. 83.005 as dividend. 

So. effective tax rate is 20.474% as Rs. 83.005*20.474% = Rs. 16.995

Therefore increase in tax is 3.479% (20.474 - 16.995)

Thanks a lot. 

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
19 October 2026
Accountant

Jari Saree Center

New Delhi

Others

View Details
Company
30 September 2026
Senior Accounts Executive

Codeboard Technology

Chennai

MBA

View Details
Company
ARTICLESHIP 07 October 2026
Article assistant

S.K.Bajpai & Co.

Noida

B.Com

View Details
Company
08 October 2026
SALES TELECALLER

HIRE NOVA

Lucknow

Graduate (Any)

View Details
Company
ARTICLESHIP 01 October 2026
Articled Assistant

KPSN & Associates LLP

Chennai

CA Inter

View Details
Company
08 October 2026
Account Executive

Elite Taxation

New Delhi

CA Foundation

View Details
Company
ARTICLESHIP 28 September 2026
Junior Accountant

J S P M & Associates LLP

Pune

B.Com

View Details
Company
10 October 2026
Accounts Associate Level 1

Abic and Mani Chartered Accountants

Kottayam

B.Com

View Details