Dividend Income U/s 8 of Income Tax Act 1961 new provision

Sec 8- of Income Tax Act Divinded Income

 For the purpose of inclusion in the total income of an assessee-

1. Any dividend declared (final dividend) by a company or distributed or paid by it within the meaning of sec. 2(22)(a)/(b)/(c)/(d)/(e) shall be deemed to the income of the previous year in which it is so declared ( declared in the AGM), distributed or paid as the case may be.

2. Any Interim Dividend shall be deemed to be the income of the previous year in the amount of such dividend is unconditionally made available to the company to the member who is entitled to it.

Transitional Provision------ Sec.10(34) shall not apply to any income by way of dividend received on or after 1st april 2020, other than the dividend received on which tax u/s 115-o and sec 115BBD, wherever applicable has been paid. 

w.e.f. Assessment Year 2021-22,

DIVIDEND INCOME SHALL BE CHARGEABLE TO TAX IN THE HANDS OF RECIPIENT SHAREHOLDERS AT NORMAL TAX RATES.   

 AND SURCHARGE ON THE DIVIDEND INCOME RETRICTED TO @15%,

(AS LIKE SURCHARGE ON STCG U/S 111A AND ON LTCG U/S 112A)

SEC- 194 TDS ON PAYMENT OF DIVIDEND TO RESIDENT

      Dividend Paid by resident company to the resident shareholders tax should be deducted @ 10% (however 7.5% rate of tds applicable Where the amount is paid during the period from 14 may 2020 to 31 march 2021.

     -----Provided no such deduction shall be made in case of resident shareholder

(i) Dividend is paid by the company by any mode other than cash & 

(ii) Total amount of dividend in the previous year does not exceed Rs 5000/-

---Proviso to Sec 57   Deduction From Dividend Income--

       Provided that no deduction shall be allowed from the dividend income or income in respect of Units of mutual fund specified U/s 10(23B), other than Deduction On account of Interest Expenses and in any previous year such deduction shall be not exceed 20% of the dividend income or income in respect of such units included in the total income for that year, without deduction under this sec. 

------- added by finance act 2020.

Set off Of business Loss against dividend income from shares held as stock in trade-------     

Even where the shares are held as stock in trade the dividend income on such such shares shall always be taxable under the head "income from other sources",       However For the purpose of set off or carry forward of business losses, Dividend Income Shall be Deemed to be income under the heal "income From Business and profession"   

This was held in the case of  Western State Trading company Pvt Ltd -1971. 

Sec 80M  Deduction in respect of certain inter-corporate dividends

   Where the Gross Total Income of a Domestic company Includes Dividend From

- Another Domestic Company

-Foreign Company

-Business Trust

      Deduction of an amount equals to the Dividend Distributed by the Domestic Company One Month prio to the due date of furnishing return of income U/s 139(1) shall be allowed From the Gross Total Income. 

---------Sec 80M is neither an expenditure nor an allowance , hence benefit of deduction U/s 80M shall be allowed For the Dividend Income Taxable Under section 115BBD also.