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Question regarding dividend distribution tax?

Statutory Audit 514 views 2 replies

My question is regarding treatment of DDT in the books of accounts. Which of the following method of treatment is correct?

Method 1:- Net profit available for distribution is Rs 1000. So entire 1000 is declared as dividend and later DDT is paid on 1000 at the enhanced rate as per Section 115-0

 

Method 2:-  Net profit available for distribution is Rs 1000. Dividend paid and DDT on that is adjusted so that the total of the two does not exceed 1000. (i.e DDT is included in max profits distributatable)

Kindly let me know which of the two methods is correct. Do we include DDT in max profit distributable? Or do we take that separately? 

 

Replies (2)

Does anyone know the solution to this? 

Method 2 is correct.

Method 1 would lead to usage of opening reserves for declaration of Dividend


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