Is ChitFund Dividend exempt?

if the chit fund is the registered company under companies act then yes. there is no other provision in income tax act for chit funds.

Andhra Pradesh High Court in the case of CIT Vs. Kovur Textile 136 ITR 61 has held that chit fund bid loss is a business loss and chit dividend is an income. Hope your problem is solved.

Sathikonda

Andhra Pradesh High Court in the case of CIT Vs. Kovur Textile 136 ITR 61 has held that chit fund bid loss is a business loss and chit dividend is an income. Hope your problem is solved.

Sathikonda

For clarification of all

Dividend earned by contributing to a chit or participating in a chit is taxabale under income-tax act.  It is not a dividend declared by a company to its share holders.  Please note this point.

Sathikonda

the chit amout if it is used for business and chit loss is claimed then the chit dividend is also taxable. If it is purely used as a savings instrument then the loss is not allowed as well as dividend is not taxable .It is treated as capital loss and capital receipt

Agreed.

Fact is quiet interesting Ravi..

Can you please enlighten the same with sections..

can any one describe which divends are fully taxable and which are exempted as per it act..

Dear All,

As per recent ruling reported in (2014) TaxCorp(LJ) 2708 (HC-MADRAS)

Chit dividend received taxable u/s 28(iii) - Mere participating in a scheme offered by the third party, wherein others also joined, does not, in any manner put forth a principle of mutuality.

Rupesh Srivastava

PH: 09986028041

I agree with Rupesh Srivatsava that the chit dividend is taxable and the Loss if any unless the person contributing the same is offering any business income and has utilised this chit fund for business purpose, the difference between the amount contributed and final amount received cannot be claimed as a Loss as the same is a capital loss only ( NO LT also) and of course dividend is taxable during the years in which the amount is received.