Amendment to [ Section-115-O & 115-Q ] w.e.f. Assessment Year 2019-2020 under Income Tax Act.

At present dividend distributed by a domestic company is subject to the following provisions-

Different aspects

Tax treatment of dividend [not being deemed dividend under section 2(22)(e)]

Tax treatment of deemed
dividend [which is covered by section 2(22)(e)]

1. Declaration, distribution
or payment of dividend by
a domestic company

Domestic company (which declares, distributes or pays dividend) is subject to dividend tax under section 115-O
[dividend tax: 15/85 of amount distributed (+ SC + EC)]

Dividend distribution tax under section 115-O not applicable

2. Dividend in the hands of shareholders of a domestic company

• Aggregate dividend (from all domestic companies received by a shareholder) up to Rs. 10 lakh - Exempt from tax under section 10(34)

Aggregate dividend exceeding Rs. 10 lakh - Amount in excess of Rs. 10 lakh is taxable in the hands of shareholder under section 115BBDA [ rate of tax: 10% (+ SC + EC)]

Taxable in the hands of recipient under Section 56 under the head “Income from other sources”

 

• Amendment - Sections 115-O and 115Q have been amended with effect from April 1, 2018. After this amendment, loan or advance given by a company (on or after April 1, 2018) which is deemed as dividend under section 2(22)(e) will be subject to the following provisions —

1.         On such deemed dividend, the company which gives loan or advance will have to pay dividend tax under section 115-O at the rate of 30% (without grossing up) [+ 12% of such tax as surcharge + 4% of tax and surcharge as health and education cess, effective rate: 34.944 %.

2.         Such deemed dividend will be exempt in the hands of recipient by virtue of section 10(34)

Amendment at a Glance for A.Y. 2019-20
Amendment to [Sec.-2(24)] Amendment to [Sec.-2(42A)] Amendment to [Sec.-9]
Amendment to [Sec.-16 & 17] Amendment to [Sec.-28] Amendment to [Sec.-36 & 40A]
Amendment to [Sec.-43] Amendment to [Sec.-43CA] Amendment to [Sec.-44AE]
Amendment to [Sec.-49] Amendment to [Sec.-56(2)(x)] Amendment to [Sec.-79]
Amendment to [Sec.-80AC] Amendment to [Sec.-80D] Amendment to [Sec.-80DDB]
Amendment to [Sec.-80IAC] Amendment to [Sec.-80JJAA] Amendment to [Sec.-80PA]
Amendment to [Sec.-80TTA] Amendment to [Sec.-80TTB] Amendment to [Sec.-115AD]
Amendment to [Sec.-115BA] Amendment to [Sec.-115BBE] Amendment to [Sec.-115JB]
Amendment to [Sec.-115O & 115Q] Amendment to [Sec.-115R & 115T] Amendment to [Sec.-139A]
Amendment to [Sec.-140] Amendment to [Sec.-143] Amendment to [Sec.-145A & 145B]
Amendment to [Sec.-193] Amendment to [Sec.-194A] Amendment to [Sec.-145O & 245Q]
Amendment to [Sec.-271FA] Amendment to [Sec.-276CC] Amendment to [Sec.-286]
 
 
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