SPECIAL
PROVISIONS RELATING TO TAX ON DISTRIBUTED PROFITS OF DOMESTIC COMPANIES
115-O.
Tax on distributed profits of domestic companies:-
2[J2] [(1) Notwithstanding
anything contained in any other provision of this Act and subject to the provisions
of this section, in addition to the income-tax chargeable in respect of the
total income of a domestic company for any assessment year, any amount
declared, distributed or paid by such company by way of dividends (whether
interim or otherwise) on or after the 1st day of April, 2003, whether out of
current or accumulated profits shall be charged to additional income-tax
(hereafter referred to as tax on distributed profits) at the rate of 3[J3] [fifteen per cent].]
4[J4] [(1A) the amount referred to in sub-section (1) shall be
reduced by the amount of dividend, if any, received by the domestic company
during the financial year, if—
(a) Such dividend is received from its subsidiary;
(b) The subsidiary has paid tax under this section on such dividend;
and
(c) The domestic company is not a subsidiary of any other company:
Provided that the same amount of dividend shall not be taken into
account for reduction more than once.
Explanation.—For the purposes of this sub-section, a company shall be a
subsidiary of another company, if such other company holds more than half in
nominal value of the equity share capital of the company.]
(2) Notwithstanding that no income-tax is payable by a domestic
company on its total income computed in accordance with the provisions of this
Act, the tax on distributed profits under sub-section
(1) shall be payable by such company.
(3) The principal officer of the domestic company and the company
shall be liable to pay the tax on distributed profits to the credit of the
Central Government within fourteen days from the date of—
(a) Declaration of any dividend; or
(b) Distribution of any dividend; or
(c) Payment of any dividend,
Whichever is earliest.
(4) The tax on distributed profits so paid by the company shall be
treated as the final payment of tax in respect of the amount declared,
distributed or paid as dividends and no further credit therefor
shall be claimed by the company or by any other person in respect of the amount
of tax so paid.
(5) No deduction under any other provision of this Act shall be
allowed to the company or a shareholder in respect of the amount which has been
charged to tax under sub-section (1) or the tax thereon.
5[J5] [(6) Notwithstanding
anything contained in this section, no tax on distributed profits shall be
chargeable in respect of the total income of an undertaking or enterprise
engaged in developing or developing and operating or developing, operating and
maintaining a Special Economic Zone for any assessment year on any amount
declared, distributed or paid by such Developer or enterprise, by way of
dividends (whether interim or otherwise) on or after the 1st day of April, 2005
out of its current income either in the hands of the Developer or enterprise or
the person receiving such dividen6[J6]
115P.
Interest payable for non-payment of tax by domestic companies:-
Where the principal officer of a
domestic company and the company fails to pay the whole or any part of the tax
on distributed profits referred to in sub-section (1) of section 115-O, within
the time allowed under sub-section (3) of that section, he or it shall be
liable to pay simple interest at the rate of 1[J7] [one per cent] for every month or part thereof on the
amount of such tax for the period beginning on the date immediately after the
last date on which such tax was payable and ending with the date on which the
tax is actually paid.
115Q.
When company is deemed to be in default:-
If any principal officer of a
domestic company and the company does not pay tax on distributed profits in
accordance with the provisions of section 115-O, then, he or it shall be deemed
to be an assessee in default in respect of the amount
of tax payable by him or it and all the provisions of this Act for the
collection and recovery of income-tax shall apply.
Explanation.—For the purposes of this Chapter, the expression
"dividends" shall have the same meaning as is given to
"dividend" in clause (22) of section 2 but shall not include
sub-clause (e) thereof.]
[J1]Chapter XIID inserted by the Finance Act, 1997, w.e.f. 1-6-1997.
[J2]Substituted by the Finance Act, 2003, w.e.f. 1-4-2003. Prior to the substitution, sub-section
(1), as originally enacted, read as under:
"(1)
Notwithstanding anything contained in any other provision of this Act and
subject to the provisions of this section, in addition to the income-tax
chargeable in respect of the total income of a domestic company for any
assessment year, any amount declared, distributed or paid by such company by
way of dividends (whether interim or otherwise) on or after the 1st day of
June, 1997 1[but on or before the 31st day of March, 2002], whether out of
current or accumulated profits shall be charged to additional income-tax
(hereafter referred to as tax on distributed profits) at the rate of 2[ten] per
cent."
1 Inserted by
the Finance Act, 2002, w.e.f. 1-4-2003.
2 Substituted for "twenty" by the Finance Act, 2001, w.e.f. 1-6-2001. Earlier, "twenty" was substituted for "ten" by the Finance Act, 2000, w.e.f. 1-6-2000.
[J3]Substituted for "twelve and one-half per cent" by the Finance Act, 2007, w.e.f. 1-4-2007.
[J4]Inserted by the Finance Act, 2008, w.e.f. 1-4-2008.
[J5]Inserted by the Special Economic Zones Act, 2005, w.e.f. 10-2-2006.
[J6]The words "not falling under clause (23G) of section 10" omitted by the Finance Act, 2006, w.e.f. 1-4-2007.
[J7]Substituted for "one and one-fourth per cent" by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. Earlier, "one and one-fourth per cent" was substituted for "one and one-half per cent" by the Finance Act, 2001, w.e.f. 1-6-2001, which was substituted for "two per cent" by the Finance Act, 2000, w.e.f. 1-6-2000.