Meaning of Distribution of taxes by income groups under Indian Tax

What is Distribution of taxes by income groups under Indian Tax


Distribution of taxes by income groups

This post explained about Distribution of taxes by income groups

The tax will be paid by parent company on the income for the subsidiary, if that subsidiary is a foreign company. In India, domestic companies pay Dividend Distribution Tax, or DDT, which is a levy in addition to income tax chargeable on their total income in an assessment year. Here's what it means

The Congressional Budget Office (CBO) has released its periodic report on the distribution of household income and federal taxes, extending the data series on these figures from 2012 to 2013.This latest edition of the CBO report shows how the enactment of the American Taxpayer Relief Act of 2012 (ATRA) and its accompanying tax increases affected taxpayer bills and behaviour during 2012–2013.


Dividend Distribution Tax (DDT)

  • Under section 115-O of the Act, Dividend Distribution Tax (‘DDT’) is an additional tax payable at 20.36% (including applicable cess and surcharge) by a Domestic Company on its distributed profits
  • If DDT is not paid within 14 days of declaration/ distribution/ payment of dividend (whichever is the earliest),
    • Company would be deemed to be an ‘assessee in default’ as per Section 201 of the Act
    • Levy of interest at 1% for every month or part of a month, for delay
    • Possible imprisonment under section 276B of the Act
  • DDT is payable separately, over and above the income tax liability of a Company
  • No deduction or credit allowed to the company for the DDT paid
  • No DDT is payable, if dividend is paid to any person for or on behalf of the New Pension System Trust
  • Finance Act 2012 has removed cascading effect of DDT in multi tier corporate structure (previously relief was available only on a single tier corporate structure)
  • Finance Act 2013 removes cascading effect of DDT on dividend received from foreign subsidiary company on fulfillment of specified conditions
  • Section 115BBD provides for concessional rate of tax of 15% on dividend received by an Indian Company from its foreign subsidiary

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