My client got a notice charging ten per cent on his dividend income under s.115BBDA even though the companies had already paid DDT. Is that double taxation, and for which years does it apply?
Section 115BBDA charges a specified assessee resident in India, whose total income includes dividend in aggregate exceeding ten lakh rupees declared, distributed or paid by a domestic company or companies on or before 31 March 2020, to income-tax at ten per cent on the amount of such dividend in aggregate exceeding ten lakh rupees, plus the tax on the rest of his income computed as if the dividend were excluded. Sub-section (2) bars any deduction for expenditure or allowance and any set off of loss in computing that dividend income, and the Explanation excludes a s.2(22)(e) deemed dividend and takes a domestic company, a s.10(23C)(iv)/(v)/(vi)/(via) fund, institution, trust, university or hospital, and a trust or institution registered under s.12A, s.12AA or s.12AB out of 'specified assessee'.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2020-04-01, reported as Section 115BBDA of the Income-tax Act, 1961, as amended up to 2026. It bears on section 115BBDA, section 115BBDA(1), section 115BBDA(2), section 2(22), section 2(22)(e), section 10(23C), section 12A, section 12AA, section 12AB, section 115-O of the Income Tax Act 1961, in How Tax Law Is Read and Assessment & Scrutiny matters.
It is not double taxation in any sense that gives a defence, and it is important to say so plainly: s.115-O charges the distributing company and s.115BBDA charges the receiving shareholder, and s.115BBDA opens with 'Notwithstanding anything contained in this Act' and contains no credit for the DDT the company has paid. For a year in which both operated, both operated — the shareholder's ten per cent was in addition to, not instead of, the company's DDT. The only relief the section gives is the ten lakh rupee floor, and the charge is only on the excess: clause (a) of sub-section (1) taxes 'the income by way of such dividends in aggregate exceeding ten lakh rupees'. Three traps. First, aggregation: the threshold is on dividend 'in aggregate' from 'a domestic company or companies', so a shareholder with eight lakh rupees from each of two companies is over the line. Second, sub-section (2) is absolute — no expenditure, no allowance, no set off of loss against the dividend taxed under clause (a); the interest a shareholder paid on money borrowed to buy the shares gets him nothing here. Third, the Explanation's carve-outs are exhaustive: a domestic company is outside the charge, and so is a registered trust or a s.10(23C) institution, but a partnership firm, an LLP, an AOP or a non-resident-turned-resident individual is a specified assessee. The section has no sub-section (3). Every published text of the section stops at sub-section (2) and the Explanation, so a citation to 's.115BBDA(3)' is a citation to nothing. On the years: the charge is confined by its own words to dividend declared, distributed or paid on or before 31 March 2020, and the earliest published version of it dates from 2016. The section is generally taken to have been inserted by the Finance Act 2016 and to have run from AY 2017-18 to AY 2020-21, but those assessment years cannot be established from the statutory text or from any amendment footnote, and this entry does not certify them.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Sub-section (1) provides that notwithstanding anything contained in the Act, where the total income of a specified assessee, resident in India, includes any income in aggregate exceeding ten lakh rupees by way of dividends declared, distributed or paid by a domestic company or companies on or before 31 March 2020, the income-tax payable shall be the aggregate of (a) income-tax on the income by way of such dividends in aggregate exceeding ten lakh rupees at ten per cent, and (b) the income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income by way of dividends. Sub-section (2) provides that no deduction in respect of any expenditure or allowance or set off of loss shall be allowed in computing the income by way of dividends referred to in clause (a) of sub-section (1). The Explanation defines 'dividend' as in s.2(22) but excluding sub-clause (e), and 'specified assessee' as a person other than a domestic company, a fund, institution, trust, university, other educational institution, hospital or other medical institution referred to in s.10(23C)(iv), (v), (vi) or (via), or a trust or institution registered under s.12A, s.12AA or s.12AB. The section contains no sub-section (3).
A resident specified assessee is charged at ten per cent on the excess over ten lakh rupees of aggregate dividend from domestic companies declared, distributed or paid on or before 31 March 2020, with no deduction, allowance or loss set off against that dividend and no credit for the dividend distribution tax the distributing company has paid; deemed dividend under s.2(22)(e) is outside the section, as are domestic companies, s.10(23C) institutions and registered trusts.
This is statutory text, not a decision. The non obstante opening, the absence of any credit mechanism for s.115-O tax, and the placing of the charge on the recipient rather than the distributor are what make the two levies cumulative; the ten lakh rupee floor and the clause (b) computation are what keep the charge to the excess.
where the total income of a specified assessee, resident in India, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies on or before the 31st day of March, 2020, the income-tax payable shall be the aggregate of—
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Handle my notice → Ask a CA on WhatsAppSection 115BBDA charges a specified assessee resident in India, whose total income includes dividend in aggregate exceeding ten lakh rupees declared, distributed or paid by a domestic company or companies on or before 31 March 2020, to income-tax at ten per cent on the amount of such dividend in aggregate exceeding ten lakh rupees, plus the tax on the rest of his income computed as if the dividend were excluded. Sub-section (2) bars any deduction for expenditure or allowance and any set off of loss in computing that dividend income, and the Explanation excludes a s.2(22)(e) deemed dividend and takes a domestic company, a s.10(23C)(iv)/(v)/(vi)/(via) fund, institution, trust, university or hospital, and a trust or institution registered under s.12A, s.12AA or s.12AB out of 'specified assessee'. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 115BBDA, section 115BBDA(1), section 115BBDA(2), section 2(22), section 2(22)(e), section 10(23C), section 12A, section 12AA, section 12AB, section 115-O of the Income Tax Act 1961. It is reported as Section 115BBDA of the Income-tax Act, 1961, as amended up to 2026. It is not double taxation in any sense that gives a defence, and it is important to say so plainly: s.115-O charges the distributing company and s.115BBDA charges the receiving shareholder, and s.115BBDA opens with 'Notwithstanding anything contained in this Act' and contains no credit for the DDT the company has paid. For a year in which both operated, both operated — the shareholder's ten per cent was in addition to, not instead of, the company's DDT. The only relief the section gives is the ten lakh rupee floor, and the charge is only on the excess: clause (a) of sub-section (1) taxes 'the income by way of such dividends in aggregate exceeding ten lakh rupees'. Three traps. First, aggregation: the threshold is on dividend 'in aggregate' from 'a domestic company or companies', so a shareholder with eight lakh rupees from each of two companies is over the line. Second, sub-section (2) is absolute — no expenditure, no allowance, no set off of loss against the dividend taxed under clause (a); the interest a shareholder paid on money borrowed to buy the shares gets him nothing here. Third, the Explanation's carve-outs are exhaustive: a domestic company is outside the charge, and so is a registered trust or a s.10(23C) institution, but a partnership firm, an LLP, an AOP or a non-resident-turned-resident individual is a specified assessee. The section has no sub-section (3). Every published text of the section stops at sub-section (2) and the Explanation, so a citation to 's.115BBDA(3)' is a citation to nothing. On the years: the charge is confined by its own words to dividend declared, distributed or paid on or before 31 March 2020, and the earliest published version of it dates from 2016. The section is generally taken to have been inserted by the Finance Act 2016 and to have run from AY 2017-18 to AY 2020-21, but those assessment years cannot be established from the statutory text or from any amendment footnote, and this entry does not certify them. If it applies to you, the first step is this: Aggregate first: add every rupee of dividend from every domestic company for the year, because the ten lakh rupee threshold and the charge both work on the aggregate.
Sub-section (1) provides that notwithstanding anything contained in the Act, where the total income of a specified assessee, resident in India, includes any income in aggregate exceeding ten lakh rupees by way of dividends declared, distributed or paid by a domestic company or companies on or before 31 March 2020, the income-tax payable shall be the aggregate of (a) income-tax on the income by way of such dividends in aggregate exceeding ten lakh rupees at ten per cent, and (b) the income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income by way of dividends. Sub-section (2) provides that no deduction in respect of any expenditure or allowance or set off of loss shall be allowed in computing the income by way of dividends referred to in clause (a) of sub-section (1). The Explanation defines 'dividend' as in s.2(22) but excluding sub-clause (e), and 'specified assessee' as a person other than a domestic company, a fund, institution, trust, university, other educational institution, hospital or other medical institution referred to in s.10(23C)(iv), (v), (vi) or (via), or a trust or institution registered under s.12A, s.12AA or s.12AB. The section contains no sub-section (3). The matter was decided on 2020-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A resident specified assessee is charged at ten per cent on the excess over ten lakh rupees of aggregate dividend from domestic companies declared, distributed or paid on or before 31 March 2020, with no deduction, allowance or loss set off against that dividend and no credit for the dividend distribution tax the distributing company has paid; deemed dividend under s.2(22)(e) is outside the section, as are domestic companies, s.10(23C) institutions and registered trusts.
This is statutory text, not a decision. The non obstante opening, the absence of any credit mechanism for s.115-O tax, and the placing of the charge on the recipient rather than the distributor are what make the two levies cumulative; the ten lakh rupee floor and the clause (b) computation are what keep the charge to the excess. In the words reproduced by the source cited on this page: "where the total income of a specified assessee, resident in India, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies on or before the 31st day of March, 2020, the income-tax payable shall be the aggregate of—"
It was decided by the CBDT Circulars & Instructions on 2020-04-01 and is reported as Section 115BBDA of the Income-tax Act, 1961, as amended up to 2026. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 115BBDA, section 115BBDA(1), section 115BBDA(2), section 2(22), section 2(22)(e), section 10(23C), section 12A, section 12AA, section 12AB, section 115-O, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A resident specified assessee is charged at ten per cent on the excess over ten lakh rupees of aggregate dividend from domestic companies declared, distributed or paid on or before 31 March 2020, with no deduction, allowance or loss set off against that dividend and no credit for the dividend distribution tax the distributing company has paid; deemed dividend under s.2(22)(e) is outside the section, as are domestic companies, s.10(23C) institutions and registered trusts. It arises in How Tax Law Is Read and Assessment & Scrutiny matters, on section 115BBDA, section 115BBDA(1), section 115BBDA(2), section 2(22), section 2(22)(e), section 10(23C), section 12A, section 12AA, section 12AB, section 115-O of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Tax only the excess over ten lakh rupees at ten per cent under clause (a), and compute the tax on the balance of total income under clause (b) as if the dividend were removed — the two are added, not applied to the same base. Do not claim interest or any other expenditure against the dividend, and do not set off any loss against it; sub-section (2) forbids both in terms. Check the Explanation before conceding: a domestic company, a s.10(23C)(iv), (v), (vi) or (via) fund, institution, trust, university, other educational institution, hospital or other medical institution, and a trust or institution registered under s.12A, s.12AA or s.12AB are all outside 'specified assessee'. Exclude s.2(22)(e) deemed dividend from the computation — the Explanation defines dividend as s.2(22) but not sub-clause (e). Do not argue credit for the company's DDT. The section gives none, and it opens with a non obstante clause. Confirm the year is within the section's window: dividend declared, distributed or paid on or before 31 March 2020. For anything later, the charge is the ordinary slab rate on dividend in the shareholder's hands, not s.115BBDA. Never cite s.115BBDA(3); the section has only sub-sections (1) and (2) and an Explanation.
Superseded by amendment. The section charges nothing on dividend declared, distributed or paid after 31 March 2020; from then dividend is taxed in the shareholder's hands under the ordinary provisions. It remains the operative law for the years in which it ran, which are inside this library's scope. The precise assessment years of its life are not verified here. The section's own words fix the end at 31 March 2020, but the start date and the assessment years have not been established from any source, and the Finance Act 2016 text has not been read. No case law under s.115BBDA has been searched for, so this entry neither asserts that there is none nor that there is any. Two things follow for a practitioner. Any live dispute under this section will be an assessment, appeal or rectification for a year in that window, and the section has to be read as it stood for that year: the words 'on or before the 31st day of March, 2020' in sub-section (1), and the reference to s.12AB in the Explanation, are not present in every version of the section, so a version taken from the wrong year will give the wrong answer on both the closing date and the carve-out for registered trusts. And because the section charges the shareholder in addition to the company's liability under s.115-O, with no credit for it, a contention of double taxation is not open on the statutory words; the argument, if there is one, has to be made on whether the assessee is a specified assessee at all. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Section 115BBDA is taken from the Department's own published text under the heading 'Tax on certain dividends received from domestic companies', and has been checked against an earlier published version of the same section. The two differ in exactly two respects, and the difference is instructive: the earlier text does not contain the words 'on or before the 31st day of March, 2020' in sub-section (1) and does not mention s.12AB in the Explanation, while the later text contains both. That brackets the closing of this charge to the same legislative moment that closed s.115-O and s.115R(2), which is generally attributed to the Finance Act 2020. Both texts run (1), (2) and the Explanation, and neither contains a sub-section (3). The published texts of sections 115-O, 115P, 115Q, 115R, 115S, 115T and 115BBDA carry no numbered footnote list at all, in any version available here, so no commencement date and no amending Act number can be sourced from them. Where a date is given below it is either printed in the statutory text itself or bracketed between two published versions of it, and the entry says which. It has accordingly not been established here that the section ran from AY 2017-18 to AY 2020-21; the only evidence for the start is that the earliest published version of the section dates from 2016, and the assessment years should be confirmed against the Finance Act 2016 and the Finance Act 2020 themselves. On the date in decided_on: this is a statutory-position entry, and 2020-04-01 is neither a decision date nor the date this section came into force — the commencement has not been established and this entry does not certify it. It is the day after the 31 March 2020 end-date printed in sub-section (1), and so the first day on which this charge no longer reaches a dividend. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A resident specified assessee is charged at ten per cent on the excess over ten lakh rupees of aggregate dividend from domestic companies declared, distributed or paid on or before 31 March 2020, with no deduction, allowance or loss set off against that dividend and no credit for the dividend distribution tax the distributing company has paid; deemed dividend under s.2(22)(e) is outside the section, as are domestic companies, s.10(23C) institutions and registered trusts.
TaxSphere, “Statutory position — s.115BBDA: the ten per cent charge on a resident shareholder receiving dividend above ten lakh rupees, and why it sat on top of DDT rather than instead of it”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-115bbda-ten-per-cent-on-dividend-above-ten-lakh-rupees/ (validity last checked 2026-09-08)
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