Interim Dividend

Dear Pooja,

There is only one requirement that when the Board of Directors declares an interim dividend there must be sufficient profits earned during the current financial period to cover the amount of dividend. In case sufficient  profit has been earned say during April to August,2010;then financials for such period are to be considered.While planning for declaration of interim dividend, you are to keep in mind the provisions for income tax, amount of current profits to be transferred to General Reserve at the year end. Dividend Tax is to be deposited within 14 days of declaration of interim dividend.

I have handled a few cases of declaration of interim dividend of a few client companies.If you require any further clarification , please write to me.

Regards,

Sunil K. Jain, FCS, AICWA, BAL

Practising Company Secretary 

skj13 @ rediffmail.com,9810104162

Thank You Sir..

I have following queries:

1. if i want to declare the interim dividend on 15th October, 2010 then the financial statements should be prepared upto 30th September, 2010 (i.e 6 monthly financials) or upto 15th october, 2010 (i.e the date of declaration of dividend).

2. provision has to be made for transfer to General Reserve means actual amount to be transfered to general reserve at the end of the financial year and not at the time of Declarion of  Interim DIvidend?

3. whether Provision for deffered tax is also to be considered?

4. What is current Dividend Tax Rate

I will be obliged if you clarify the above points

Dear Pooja,

1.Consider Financial Statements upto 30th September,2010.

2. Transfer to General Reserve to be made at the year end.

3.Provision for deffered tax is to be considered at the year end.

4. Current Dividend Tax Rate is 15%,plus 7.5% Surcharge plus 3% Education Cess;( the effective rate comes to 16.60875%)

Regards,

Sunil K. Jain, FCS, AICWA, BAL

Practising Company Secretary

skj13 @ rediffmail.com, 9810104162