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Tax Implications

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Subin Mathew

32 Points Posted on 30 May 2020

A company sold its land. a part of the consideration was received in the banks of a shareholder holding more than 10%. What are the tax implications? Would deemed dividend become applicable?

Replies (3)

Quick Summary

This discussion examines the tax implications for a company that sold land, with part of the payment being made directly to a shareholder holding over 10% of the company's shares. The core question is whether this transaction constitutes a deemed dividend, with the consensus leaning towards yes. Further clarification is sought on why the funds were directed to the shareholder's account, especially given the shareholder's substantial interest (over 40%) and potential lack of awareness regarding tax regulations.

Kiran Hathalia

460 Points Posted on 30 May 2020

According to me, yes, the same shall be considered as deemed dividend. But tell me one thing, why the consideration has been credited to shareholder's account.