As per section 115BBDA dividend income from equity shares of domestic company is taxable @ 10% if the dividend income exceeds 10 Laks. Now, if my my dividend income is 15 lakh then 5 lakh will be taxable @ 10%.But if i have dividend income of Rs. 20 Lakhs, out of which 15 lakh is from equity shares and 5 lakh from equity mutual fund. Then dividend income from equity shares of domestic company will become taxable under 115BBDA.But is this section 115BBDA applicable to dividend income from Equity mutual fund units??
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Dividend income tax applicability under section 115BBDA
Replies (7)
115BBDA APPLICABLE TO DIVIDEND INCOME FROM DOMESTIC CO. BE IT FROM ANYWHERE
Sec.115BBDA will not be applicable in case of Income from mutual funds (whether equity oriented or not). Indeed, Association of Mutual Funds of India (AMFI) has submitted a budget proposal to finance department to clarify the same through circular or notification or through insertion in 115BBDA itself. Section 115BBDA applicable for dividend declared or distributed or paid by a Domestic company.
The definition of Domestic company as per 2(22A) means - An Indian company, or any other company which, in respect of its income liable to tax under this Act, has made the prescribed arrangements for the declaration and payment, within India, of the dividends (including dividends on preference shares) payable out of such income
Income of a Mutual fund exempt u/s.10(23D). Hence, it does not fall under category of Domestic company. Section 115BBDA applies in case of distribution by Domestic company alone. Indeed, Income from mutual fund (Equity oriented or not) is exempt in the hands of unit holder u/s.10(35). If 115BBDA provides for taxation of the same then 10(35) must provide for exception through wordings like "subject to the provisions of section 115BBDA, Income from mutual funds exempt u/s.10(35)", but no such words are found in law. Indeed, section 115O,P,Q deals with tax on distribution of dividend by domestic company. If the definition of domestic company covers mutual fund company then "Section:115R- Tax on distributed income to unit holders" become redundant. And if definition of Domestic company covers Mutual fund company also then sec.115O must provides for exception w.r.t 115R. Also, no where we have found the term "Share holder" in case of mutual funds except the term Unit holder prevails. The definition of the term Dividend u/s.2(22)(a)/(b)/(c)/(d) explains about dividend received by share holders alone (No where termed the word - Unit holder) but it is inclusive definition, hence scope for expansion possible. But prima facie, the term Unit holder absent u/s.2(22)
Hence, to conclude on - 115BBDA not applicable in case of Dividend from Equity Oriented Mutual Funds
Please note down that section 115BBDA applicable even in case of preference dividend distributed by Domestic company.
TAX ON CERTAIN DIVIDENDS UNDER SECTION 115BBDA IN THE HANDS OF SHAREHOLDERS -EXEMPTION UNDER SECTION 10(34) PERTAINING TO DIVIDEND INCOME FROM DOMESTIC COMPANIES IS NOT AVAILABLE FROM THE ASSESMENT YEAR 2017-18 IF AGGREFATE DIVIDEND ( RECEIVED FROM DOMESTIC ) EXCEEDS RS.10 LAKHS IN THE PREVIOUS YEAR. IN SUCH A CASE THE AGGREGATE DIVIDEND IS TAXABLE UNDER SECTION 115BBDA AT THE RATE OF 10%....
Under 115BBDA if dividend received by assessee (other than companies ) from domestic companies is exceeding 10 lakhs then on excess dividend above 10 lakhs, there is a flat rate of 10% of Tax
Note that 115BBDA is not applicable on dividend paid by equity MF.
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earlier post -- by Sanyasachi
How come aggregate dividend is taxable ?? wow 😇
Shareholders ???
but do not include domestic companies, 10(23C) trusts institution,. 12A, 12AA Trusts institution
No time for criticising.
But it's clarifying to Forum visitors/users.
Note that 115BBDA is not applicable on dividend paid by equity MF.
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earlier post -- by Sanyasachi
How come aggregate dividend is taxable ?? wow 😇
Shareholders ???
but do not include domestic companies, 10(23C) trusts institution,. 12A, 12AA Trusts institution
No time for criticising.
But it's clarifying to Forum visitors/users.
THIS SECTION HAS BEEN INTRODUCED RECENTLY.
AGGREGATE DIVIDEND IN EXCESS OF 10 LAKHS IS TAXABLE @ 10%
I HAVE OMMITED THE WORD IN EXCESS OF RS.10 LAKHS.
AGGREGATE DIVIDEND IN EXCESS OF 10 LAKHS IS TAXABLE @ 10%
I HAVE OMMITED THE WORD IN EXCESS OF RS.10 LAKHS.
Response to above reply by Sanyasachi
Omission of that word - in excess of - made huge difference
Another one "shareholders" also make huge wrong impact. But response skipped
This is an old section.
What is conveyed by introduced recently ?
One has to double check
Regards
Omission of that word - in excess of - made huge difference
Another one "shareholders" also make huge wrong impact. But response skipped
This is an old section.
What is conveyed by introduced recently ?
One has to double check
Regards
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