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Whether dividend is liable to st?

CA Ganesh Karthik (Chartered Accountant) (368 Points)

07 April 2012

Hi All...

Had a doubt in the current negative list of services as well as the exemption list.

Whether dividend paid by the company will be liable for service tax, since it does not feature in either negative list or exemption list? (i.e. dividend not specifically provided in the negative list)

Or will I treat dividend as a transaction in money or actionable claim which featues in the negative list?

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3 Replies

lucky bhatia (-) (37 Points)
Replied 13 April 2012

payment of dividend is not any service, it is mere return on investment

it will be liable for cdt or taxable in ios

Pinky Agarwal (Chartered Accountant) (426 Points)
Replied 13 April 2012

Dear Sir,

Service tax is not Applicable on Dividend Income as far i know...

Regards,

Pinky Agarwal.

Satish (CA Final Student) (479 Points)
Replied 13 April 2012

If you go through the definition of 'Service', the pre-requisites to term anything as service is as follows -

1. There should be a service provider

2. There should be a service receiver

3. There should be something which can be treated as service

4. There should be a consideration for such service.

Shareholders are the owners of the company and the contributories to the memorandum of the company. Distribution of profits to shareholders cannot be a service as there is no service provider or service receiver.

Hence, dividend is liable to service tax.

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