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Dividend Distribution Tax

11 June 2010

In Section 115-O(1), dividend received from the subsidiary should be deducted from dividend declared, distributed or paid by a company.Now my queries are:

1. What should be the Assessment Year for the purpose of Dividend distribution Tax Challan., if dividend has been declared after year end; say March'2010?

2. If subsidiary has distributed dividend during the Financial year 2009-10, and holding company has declared dividend in Financial Year 2010-11 for the year 2009-10, can deduction still be claimed u/s 115-O(1) for the dividend distributed by subsidiary out of dividend declared for the purpose of Dividend distribution Tax?

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4 Replies

Shobhit (CA, CS) (100 Points)
Replied 11 June 2010

As far as Assessment year is concerned, for the purpose of Dividend distribution Tax Challan., if dividend has been declared after year end; say March'2010, it is AY 2011-12 (FY 2010-11).

The DDT rate will also be 16.609 %, not 16.995 %, b'coz of surcharge 7.5 % applicable from AY 2011-12

chetan Loknathka (student) (102 Points)
Replied 12 June 2010

Dividend distribution Tax Challan., if dividend has been declared after year end callan's year 2009-10

ddt cannot claimed as a expnses

ddt rate for 2009-10 16.995

Shobhit (CA, CS) (100 Points)
Replied 12 June 2010

Chetan,

DDT rate for dividend declared in 2009-10 is 16.995, but the same for dividend declared in FY 2010-11 in respect of FY 2009-10 is 16.609 %. For the Income tax purpose, dividend is to be paid taking into consideration the year of declaration.

For reference, check out the recent annual reports of Infosys or TCS for FY 2009-10. The DDT rate they applied for Final dividend is 16.609 % though the same is paid for FY 2009-10

And MS pallavi, as far as your 2nd query is concerned, no deduction of DDT will be available. The deduction can be claimed only if dividend is received in the same financial year by the holding Co. in which it is declared by it.

Manish (executive accounts) (22 Points)
Replied 03 November 2010

In ITR 6, there is no separate row/ column, in DDTP schedule, for claiming deduction of dividend tax paid by subsidiary company. How can we claim deduction? e.g.

dividend declared by holding co. is Rs. 10,00,000/- & dvidend declared by subsi. co. is Rs. 2,00,000/- on which dividend distribution tax paid by subsi. co. is 33990/-

Now, the holding co. paid DDT on balance dividend i.e. on Rs. 8,00,000/-, i.e. Rs. 135960/-. Now in ITR 6, schedule DDTP, we can neither enter dividend tax paid by subsi. co. nor can we deduct dividend received from subsi. co. as there is no specific row or column for this purpose. Pl. advise, how to enter these figures. Thanx in advance.