Section 115-O(3)

Section 115-O(3) — the law in short

What the courts have decided on section 115-O(3), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• 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.
• Statutory position — s.115P interest at one per cent a month and s.115Q deeming the company an assessee in default on unpaid DDT CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  My company paid its dividend distribution tax late. What interest runs, from when, and what can the Department do to recover the tax itself?
  Section 115P charges simple interest at one per cent for every month or part of a month on the unpaid tax on distributed profits, running from the date immediately after the last date on which the tax was payable under s.115-O(3) — fourteen days from the earliest of declaration, distribution or payment — and ending on the date the tax is actually paid. Section 115Q then deems the principal officer and the company to be an assessee in default in respect of the amount payable, and applies all the provisions of the Act for the collection and recovery of income-tax.

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.