LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Guidance required on applicability of Sec. 94 (7).

Shefali Bajpai (Article Assitant & CA Final Student) (1148 Points)

16 April 2008

Hello Seniors & Friends,

I'll be glad if somone can guide me on the following:

1. applicability of Sec. 94(7) of Income Tax Act;

2. the exact meaning of dividend stripping;

And when can section 94(7) of Income Tax Act be invoked?

Regards,

Shefali.

Reply
Follow
Share

4 Replies

S.Srinivasaraghavan (Chief Financial Officer and Co) (11318 Points)
Replied 22 May 2008

Section 94 (7) will be invoked, in the case of units or securities, if the same is acquired within a period of three months prior to the record date and the same are sold within a period of three months (in the case of securities) and nine months (in the case of units), provided the dividend or income on the securities or unit are exempt.

Dividend stripping is nothing but acquisition of securities or units within the above said period just to avail the tax free dividend

Shefali Bajpai (Article Assitant & CA Final Student) (1148 Points)
Replied 23 May 2008

Thanks a lot for the reply Sir.

Umesh V Naig (Statutory Analyst) (452 Points)
Replied 04 January 2009

Applicability of dividend tax . can the free reserves of a pvt ltd company can be distributed to its share holders every year and if so any tds or income tax is applicable and what is the procedure in the hands of the receipent ie share holder