Query U/S 115QA - Challan for Tax Payment and Type of Payment (Minor Head)

Hi BKK,

Great question on the proper challan and payment heads for tax under Section 115QA (Tax on distributed income on buyback of shares).

Key points:

• Section 115QA applies to tax on distributed income to shareholders on buyback of shares by domestic companies.

• The tax is payable by the company on the distributed income (difference between buyback price and issue price).

Challan & Payment Codes:

• The tax payment for Section 115QA should be made using Challan No. 280 (Income Tax - Non-TDS/TCS).

• For Major Head (Nature of payment):

  Use Code 400 – "Corporation Tax".

• For Minor Head (Type of payment):

  Unfortunately, in the challan dropdown, there is no separate code explicitly mentioning 115QA tax.

• However, CBDT’s instructions and common practice suggest using Minor Head Code 106: “Tax on distributed profits of Domestic Companies” for this payment.

Why Code 106?

• Code 106 corresponds to Section 115O (Tax on dividend distributed by domestic companies), which is the closest and analogous code.

• Section 115QA tax is also a tax on distribution by domestic companies, so tax authorities accept code 106 for this purpose.

Summary for Challan 280:

Important:

• While paying online, select ‘Corporate Tax’ (400) and Minor Head 106.

• Keep the payment receipt and challan copy safely for records and filing.

• Mention this payment clearly in the company’s income tax return (ITR) under the appropriate section.