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dividend distribution tax

Rachit (Analyst) (913 Points)

27 April 2010

A company intends to pay dividend for the FY ending 31/03/2010, in June 2010.What is the applicable Div Distribution tax Rate ?

@ 16.995% or @ 16.60875%

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6 Replies

(Guest)

dear rachit

company will liable to pay tax at the rate of 16.995%.bcoz company continue to be liable to pay surcharge if his total income exceeds 1crore according to finance act2009

Amir (Learner) (4016 Points)
Replied 27 April 2010

Dear Rachit,

For Dividend Tax Purposes, the year to which it pertains is not relevant. It is a current item & hence rate prevailing at the earliest of the event shall be applicable -

(a) declaration of any dividend; or

(b) distribution of any dividend; or

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 27 April 2010

So rate idaelly should be 16.60875% as surcharge for the year is 7.5% on corporates.

manikandan.J (Accounts Manager) (363 Points)
Replied 27 April 2010

DDT @ 16.995%

15%+1.5% of surcharge +3% cess

and also make the provision for general Reserve not exceeding 10% of profit

(Guest)

dear aditya sir

div. dis tax rate how can be 16.60875%.bcoz the com. makes declaration in f/y 2009-10 itself.

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 28 April 2010

See Tarun dividend is to be distributed though for F. Y. 2009 - 10 the declaration for the same will be in June 2010 probably in the AGM and hence the rate of surcharge applicable at that date would be 7.5% the rate prevailing at that time.

Also if you remember the rates of DDT was changed w. e. f. 01.04.2007 from 12 to 15 % and all the companies which declared dividend in the AGM though for F. Y. 2006 - 07 paid DDT @ 15% and not 10%