Quick Summary
Withdrawal of concessional rate of taxation on dividend income under section 115BBD 1. Section 115BBD of the Act provides for a concessional rate of tax of 15 % on the dividend income received by an Indian company from a foreign company in which the said Indian company holds 26 % or more in nominal value of equity shares (specified foreign company). This rate was aligned to the rate of tax provided under section 115-O of the Act. 2. Finance Act, 2020 abolished the dividend distribution tax
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FAQ :
Section 115BBD previously provided a concessional tax rate of 15% on dividend income received by an Indian company from a foreign company where the Indian company held 26% or more in nominal value of equity shares.
The concessional rate is being withdrawn to provide parity in tax treatment between dividends received by Indian companies from specified foreign companies and those received from domestic companies.
This amendment takes effect from 1st April 2023, applying to assessment year 2023-24 and subsequent assessment years.
Previously, dividend income received by an Indian company from a specified foreign company was taxed at a concessional rate of 15%.
After this change, dividend income received by Indian companies from specified foreign companies will be taxed at applicable rates plus surcharge and cess, similar to dividends from domestic companies.
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