Section 115-O(2) — the law in short
What the courts have decided on section 115-O(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Statutory position — s.115-O: the dividend distribution tax charge, the fifteen per cent rate, the thirty per cent proviso for s.2(22)(e), and the s.115-O(1B) grossing-up
CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
My company paid dividend distribution tax for a year before 2020 and the Assessing Officer is now recomputing it. What does s.115-O actually charge, at what rate, and on what base?
Section 115-O charges a domestic company to additional income-tax, called tax on distributed profits, on any amount declared, distributed or paid by way of dividends (whether interim or otherwise) on or after 1 April 2003 but on or before 31 March 2020, whether out of current or accumulated profits, at the rate of fifteen per cent. A proviso to sub-section (1) makes that rate thirty per cent for a deemed dividend under s.2(22)(e), and sub-section (1B) requires the net distributed profits to be grossed up — increased to such amount as would, after reduction of the tax on the increased amount at the sub-section (1) rate, be equal to the net distributed profits — so the effective burden is higher than the headline fifteen per cent.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.