Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: empanelment :: VAT Audit :: TDS :: articles on VAT and GST in India :: list of goods taxed at 4% :: form 3cd
 
 
« News Headlines »
 A tax saver scheme with higher returns
 GST registration mandatory for TDS entities
 Govt rules out extension for filing GSTR-3B returns after December
 Tax department’s e-filing portal out of action for 2 hours
 Use ITR-2 to show salary and capital gains income
  TDS Applicability On Government Contracts Under Gst (Under Section 51 Of The Cgst Act, 2017)
  How to file ITR for FY 2016-17 and all the links you need
 All about E-way Bill under GST
 Good and simple tax: on the GST regime
 Seeks to extend the time limit for filing of GSTR-1, GSTR-2 and GSTR-3
 Good news, find Tax Return Preparers soon at a place near you; 5 things to know

Budget may widen dividend tax break
June, 18th 2009

Exemption may apply to subsidiaries lower down the corporate holding chain.

The finance ministry is considering a proposal to extend the tax exemption on inter-corporate dividends further down the chain of corporate subsidiaries in the upcoming Union Budget, a long-standing demand from India Inc.

The proposal is under consideration but a final decision has not been taken, said a senior government official. The move is expected to cost the exchequer less than Rs 3,500 crore a year, he added, an argument that has been made in favour of the proposal.

Current provisions allow exemption from paying dividend distribution tax (DDT) up to one layer. That means, a domestic holding company is exempt from paying DDT for the dividend it receives from its subsidiary. This exemption is not, however, permitted one step down that is, if the subsidiary company receives a dividend from its own subsidiary company which, in effect, creates a reverse cascade.

Overall, therefore, the one-step DDT exemption does not benefit many corporate groups, which tend to have multi-layered holding structures. At present, companies have to pay DDT at 15 per cent on dividend paid to shareholders, who are not taxed. With cess and other components, the effective rate comes to 16.99 per cent.

Industry lobby groups have argued for the re-introduction of Section 80M of the Income Tax Act (I-T), which was scrapped in 2004 after DDT was introduced. This section allowed the dividend received from another domestic subsidiary to be deducted from taxable income. For example, if company A receives a dividend of Rs 1 crore from its subsidiary B, this Rs 1 crore is exempt from calculating the taxable income for company A. The only condition is company A pays out a dividend of more than Rs 1 crore.

The one-step DDT exemption was introduced in last year's Budget following representations from industry representatives.

Industry bodies argue that a multi-layered corporate structure is essential for financial engineering. In addition, investment companies have been adversely impacted because of the one-step DDT structure, as it reduces their return on investment.

However, some officials in the finance ministry have argued that section 80M is not compatible with Section 115-O of the I-T Act that has provisions related to tax on dividends to shareholders.

If section 80M is reintroduced, then we will go back to the old system of taxing dividends in the hands of shareholders, said a senior revenue department official.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - About Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions