{"id":2294,"date":"2016-03-08T15:01:44","date_gmt":"2016-03-08T09:31:44","guid":{"rendered":"http:\/\/carajput.com\/blog\/?p=2294"},"modified":"2021-12-20T21:38:20","modified_gmt":"2021-12-20T16:08:20","slug":"corporate-and-professional-update-dated-march-8-2016","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/corporate-and-professional-update-dated-march-8-2016\/","title":{"rendered":"Recipient pay tax on Dividend Income, Govt Abolition of DDT"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d75b736690c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d75b736690c\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-update-dated-march-8-2016\/#The_Ongoing_Controversy_On_Erroneous_Applicability_Of_Dividend_Distribution_Tax_Finally_Ends\" title=\"The Ongoing Controversy On Erroneous Applicability Of Dividend Distribution \u00a0Tax Finally Ends\u00a0 \u00a0\u00a0\">The Ongoing Controversy On Erroneous Applicability Of Dividend Distribution \u00a0Tax Finally Ends\u00a0 \u00a0\u00a0<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-update-dated-march-8-2016\/#New_Update_on_FY_2020-21\" title=\"New Update on FY 2020-21\u00a0\">New Update on FY 2020-21\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-update-dated-march-8-2016\/#Recipient_pay_tax_on_Dividend_Income_Govt_Abolition_of_DDT\" title=\"Recipient pay tax on Dividend Income, Govt Abolition of DDT\">Recipient pay tax on Dividend Income, Govt Abolition of DDT<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-update-dated-march-8-2016\/#Govt_Abolition_of_DDT_ie_Dividend_Distribution_Tax_introduction_of_dividends_taxation_in_the_hands_of_the_recipient\" title=\"Govt Abolition of DDT (i.e. Dividend Distribution Tax) &amp; introduction of dividends taxation in the hands of the recipient\">Govt Abolition of DDT (i.e. Dividend Distribution Tax) &amp; introduction of dividends taxation in the hands of the recipient<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/corporate-and-professional-update-dated-march-8-2016\/#Mandatory_TDS_filling_in_accordance_with_new_dividend_legislation_%E2%80%93_TDS_on_dividend_income\" title=\"Mandatory TDS filling in accordance with new dividend legislation\u00a0&#8211; TDS on dividend income\">Mandatory TDS filling in accordance with new dividend legislation\u00a0&#8211; TDS on dividend income<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-20181\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2016\/03\/corporate.jpg\" alt=\"\" width=\"815\" height=\"567\" \/><\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"The_Ongoing_Controversy_On_Erroneous_Applicability_Of_Dividend_Distribution_Tax_Finally_Ends\"><\/span><span style=\"color: #ff6600;\"><strong>The Ongoing Controversy On Erroneous Applicability Of Dividend Distribution \u00a0Tax Finally Ends<\/strong><\/span><strong><span style=\"color: #ff6600;\">\u00a0<\/span> \u00a0\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">During the past quarters, the provisions of law regarding buy-back of shares since introduction of <a href=\"https:\/\/carajput.com\/blog\/tag\/what-is-interim-dividend-and-final-dividend\/\">dividend distribution tax (\u2018DDT\u2019)<\/a> under section 115Q of the Act w.e.f. 01.04.2003 till 31.05.2013 are being interpreted in a conflicting manner by the tax authorities and taxpayers, thereby giving rise to disputes on this issue.<\/p>\n<p style=\"text-align: justify;\">It has been contended that subsequent to introduction of section 115QA in the Act , the income-tax authorities, in some cases have sought to re-characterize the purchase consideration received on account of buy-back of shares, undertaken prior to 01.06.2013, as dividend and accordingly, subjecting the amounts so distributed by the companies to DDT. This has lead to un-ended litigation and undue harassment to the tax payers.<\/p>\n<p style=\"text-align: justify;\">In a welcome move, the <a href=\"https:\/\/www.caindelhiindia.com\/blog\/launched-new-income-tax-e-filing-portal\/\">CBDT<\/a> has come up with a clarification so far as income arising to the shareholder on but back of shares between the period 01.04.2000 till 31.05.2013 would be taxed as capital gains in the hands of the recipient.<\/p>\n<p style=\"text-align: justify;\">In accordance with section 46A of the Act and no such amount shall be treated as dividend in view of provisions of section 2(22)(iv). The ongoing controversy is enclosed herewith along with the latest CBDT Circular No. 03\/2016 dt. 26th Feb 2016.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"New_Update_on_FY_2020-21\"><\/span><span style=\"color: #000080;\"><strong>New Update on FY 2020-21\u00a0<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Recipient_pay_tax_on_Dividend_Income_Govt_Abolition_of_DDT\"><\/span><span style=\"color: #ff0000;\">Recipient pay tax on Dividend Income, Govt Abolition of DDT<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Govt_Abolition_of_DDT_ie_Dividend_Distribution_Tax_introduction_of_dividends_taxation_in_the_hands_of_the_recipient\"><\/span><span style=\"color: #000080;\"><strong>Govt Abolition of DDT (i.e. Dividend Distribution Tax) &amp; introduction of dividends taxation in the hands of the recipient<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>As a result, an Indian company that pays dividends is no longer subject to DDT and should instead withhold tax at source at the time of payment because the dividend receiver is now taxed. The withholding tax (&#8216;WHT&#8217;) on dividends paid to resident shareholders is 10%, whereas the rate for non-resident shareholders is 20% under Indian domestic tax law (plus applicable surcharge and cess).<\/li>\n<li>However, under the DTAAs (double taxation avoidance agreements) that India has with other countries, preferential WHT rates are available if the recipient of such dividends meets the eligibility requirements.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Mandatory_TDS_filling_in_accordance_with_new_dividend_legislation_%E2%80%93_TDS_on_dividend_income\"><\/span><span style=\"color: #000080;\"><strong>Mandatory TDS filling in accordance with new dividend legislation\u00a0&#8211; TDS on dividend income<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Mandatory reporting in accordance with new income tax law on dividend regulations Company must submit TDS returns in India to report dividends paying in India, Normal rate of Withholding tax i.e TDS rate is 10% on dividend income paid in excess of INR 5k from mutual fund or a company.<\/li>\n<li>After the Abolition of Dividend Distribution Tax will ensure to make Indian-equity markets more encourage &amp; attractive for FDI (foreign investment) in India. But due to COVID-19 pandemic \u00a0across the globe, chances of increasing foreign investment at this stage are remote.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">For query or help, contact: \u00a0<a href=\"mailto:singh@carajput.com\">singh@carajput.com<\/a> or call at 09555 555 480<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Ongoing Controversy On Erroneous Applicability Of Dividend Distribution \u00a0Tax Finally Ends\u00a0 \u00a0\u00a0 During the past quarters, the provisions of law regarding buy-back of shares since introduction of dividend distribution tax (\u2018DDT\u2019) under section 115Q of the Act w.e.f. 01.04.2003 till 31.05.2013 are being interpreted in a conflicting manner by the tax authorities and taxpayers, &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[6014],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/2294"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=2294"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/2294\/revisions"}],"predecessor-version":[{"id":20289,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/2294\/revisions\/20289"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=2294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=2294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=2294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}