Taxontips
No Result
View All Result
Sunday, June 1, 2025
Login/ Register
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Talk to an Expert
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
No Result
View All Result
Taxontips
No Result
View All Result

Dividend is now taxable and hence now various provisions including section 14A for disallowance of expense are of no use

Income tax Expert by Income tax Expert
June 1, 2021
in Income Tax News
0
Taxability of dividend after Dividend distribution tax (DDT) has been scrapped by Finance Bill, 2020
138
SHARES
1.7k
VIEWS
image_pdfPDFimage_printPrint

Finance Act, 2020 had made dividend taxable in the hands of recipient and with it many of the provisions under Income tax other than section 10(34) and 115-O became useless.

In this post we are going to talk about section 115BBDA and section 14A of Income tax act which will become ineffective as now dividend is taxable in the hands of recipient. Let’s have a look at them:

1. Section 115BBDA: This section was introduced by Finance Act, 2016 w.e.f. 01.04.2017 wherein the intention behind this section was to tax various high net worth individuals who were investing great amount in stock market also earning tax free dividend or owners of private limited companies who were just paying around 20% tax on dividend when they were in 30% tax slab.

Hence, this provision was introduced wherein if the dividend received from domestic companies is above Rs. 10 lakh, assessee will have to pay 10% tax on amount above Rs. 10 lakh.

Roughly using this section government was again charging 30% tax from such people.

The relevant extract of this section are as under:

“Notwithstanding anything contained in this Act, where the total income of a specified assessee, resident in India, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies [on or before the 31st day of March, 2020], the income-tax payable shall be the aggregate of—

(a)  the amount of income-tax calculated on the income by way of such dividends in aggregate exceeding ten lakh rupees, at the rate of ten per cent;”

Hence, now after Finance Act, 2020 since all types of dividends are taxable in the hands of recipient at their respective slab rate, this section is no more required and thus it is not applicable on any dividend received after 31.03.2020.

 

2. Section 14A: Section 14A deals with disallowance of deduction of expenditure incurred in relation to income which does not form part of income i.e. exempt income. Relevant extract of the section is as under:

“For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.”

Along with the above section there was rule 8D which lays down the manner to calculate the expenditure which needs to be disallowed.

As per latest rule 8D the following expenditure needs to be disallowed:

“expenditure directly relating to income which does not form part of total income along with an amount equal to one per cent of the annual average of the monthly average of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income .

Section 14A read with Rule 8D had created various cases and litigation and in majority of the cases relating to section 14A the issue was always related to investment in shares and earning of dividend income as dividend was exempt income which does not form part of total income.

The assessing officer used to use this section to disallow common admin expenditure every year where assessee has investment in shares irrespective of the fact that no dividend income was earned during the year and many a times expenditure disallowed would be more than the income actually earned.

As the section clearly says that expenditure incurred in relation to income which does not form part of total income and hence when no such income has been earned no deduction should be disallowed.

However, Ld. assessing officer used to disallow expenditure even in the year when there was no such exempt income earned by assessee and which would lead to undue litigation by assessee.

Also, Hon’ble Supreme court in various cases have rejected SLP of revenue wherein they had appeal against order of High court where High court had allowed expenditure in the year when no such income was earned by assessee. Reference of few judgements where SLP was dismissed are as under:

In 2019 Supreme court rejected SLP filed in case of Cheminvest Ltd. v. CIT [2015] 378 ITR 33 (Delhi HC), and in 2018, SC had dismissed SLP in case of CIT v. Chettinad Logistics (P.) Ltd filed by the Revenue.

 

However, now that dividend has become taxable in hands of assessee from 01.04.2020, so from now on one would not see any disallowance being made in many cases u/s 14A of the Income tax act.

image_pdfPDFimage_printPrint
Tags: dividenddividend taxable
Previous Post

Canara Bank Invites Application for Empanelment as Concurrent Auditors

Next Post

SEBI- Empanelment of forensic auditors for conducting forensic audit of listed companies

Related Posts

Tatva Chintan Pharma Chem Limited IPO details and capital gain tax on selling IPO allotment | Capital gain on IPO
Case Laws

ITAT Mumbai: Capital Gains on Indian Mutual Funds Not Taxable in India for Non-Residents under DTAA [Case law]

May 2, 2025
Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20-
Income Tax News

No relief under section 87A for capital gain even after date extended to file revised return for AY 2024-25?

April 1, 2025
Received mail from GSTN “Aggregate turnover being more than Rs. 5 Cr during FY 2019-20” What does this mean?
Income Tax News

Assessee receiving message for 80GGC donation for AY 2022-23 from Income tax department

January 29, 2025
Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20-
Income Tax News

Guidance note 2 issued for Vivad se vishwas Scheme, 2024 [Read circular]

January 1, 2025
Guidelines for manual selection of returns for Complete Scrutiny during the financial-year 2019-20-
Income Tax News

Due date extended for filing belated, revised return and Vivad se vishwas declaration

December 31, 2024
Due date for Tax audit for A.Y. 2019-20 extended from 30th September to 31st October
Income Tax News

Extension of due date for furnishing return of income from 30.11.2024 to 15.12.2024

November 30, 2024
Next Post
SEBI provides further extension to submit results for the quarter/half year/financial year ending 31st March 2020

SEBI- Empanelment of forensic auditors for conducting forensic audit of listed companies

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Google Custom search

Recent Posts

  • Statutory Compliance Calendar for May 2025 | Income tax, GST and various other laws
  • ITAT Mumbai: Capital Gains on Indian Mutual Funds Not Taxable in India for Non-Residents under DTAA [Case law]
  • Statutory Compliance Calendar for April 2025 | Income tax, GST and various other laws
  • No relief under section 87A for capital gain even after date extended to file revised return for AY 2024-25?
  • Statutory Audit of Cash and Cash Equivalents in Indian Companies [Company Law]

Recent Comments

  • k.salam on Statutory Compliance Calendar for May 2025 | Income tax, GST and various other laws
  • Brendan Gleeson on Clarification for the purposes of Section 269ST of the I.T. Act in respect of dealership/distributorship contract in case of Co-operative Societies
  • Kovac Ryker on Clarification for the purposes of Section 269ST of the I.T. Act in respect of dealership/distributorship contract in case of Co-operative Societies
  • Hailey Bradwell on Clarification for the purposes of Section 269ST of the I.T. Act in respect of dealership/distributorship contract in case of Co-operative Societies
  • ADMIN on Submit response to confirm/ revise the refund claim – Why are you getting this mail and how to get refund

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Browse Topics by Date

June 2025
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
30  
« May    
  • GSTR 9/ 9C extended : AGAIN

    GSTR 9/ 9C due date to be extended to 31.10.2020 | E-invoicing will be voluntary in the beginning

    6537 shares
    Share 2615 Tweet 1634
  • How to pay Membership and COP fees of ICAI for 2020-21 |

    6444 shares
    Share 2578 Tweet 1611
  • Code/ Nature of payment 6CR updated by NSDL in challan 281 for paying TCS on sale of goods

    5902 shares
    Share 2361 Tweet 1476
  • Are all the due dates of tax audit and Income tax return for FY 2019-20 extended to 31.03.2021 by the bill presented in Lok sabha Dt. 18.09.2020

    4855 shares
    Share 1942 Tweet 1214
  • SFT transaction mentioned in Form 26AS | What does it mean? | Who reports it? | SFT codes transaction type

    4083 shares
    Share 1633 Tweet 1021

Recent Notification

Compliance due dates for June, 2020 | Compliance calendar for June, 2020 | 20+ compliances

Statutory Compliance Calendar for May 2025 | Income tax, GST and various other laws

May 8, 2025
Tatva Chintan Pharma Chem Limited IPO details and capital gain tax on selling IPO allotment | Capital gain on IPO

ITAT Mumbai: Capital Gains on Indian Mutual Funds Not Taxable in India for Non-Residents under DTAA [Case law]

May 2, 2025

RSS Taxontips

  • Statutory Compliance Calendar for May 2025 | Income tax, GST and various other laws
  • ITAT Mumbai: Capital Gains on Indian Mutual Funds Not Taxable in India for Non-Residents under DTAA [Case law]
  • Statutory Compliance Calendar for April 2025 | Income tax, GST and various other laws
  • No relief under section 87A for capital gain even after date extended to file revised return for AY 2024-25?
  • Statutory Audit of Cash and Cash Equivalents in Indian Companies [Company Law]
  • Statutory Audit of Trade Receivables in Indian Companies [Company law]
  • Statutory Compliance Calendar for February 2025 | Income tax, GST and various other laws
  • Budget 2025 updates | Income tax and GST updates
  • Assessee receiving message for 80GGC donation for AY 2022-23 from Income tax department
  • Statutory Audit of Inventories for Indian Companies [Company Law]

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Site menu

  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Taxontips

TaxOnTips provides you all tax related solutions in easy way and update you with its regular updates & notifications Visit us for details.
We are based in Jaipur, India

© 2019-2023 Taxontips.com - Tax assistance at your Fingertips

No Result
View All Result
  • Login/Signup
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • About us
  • Contact us
  • Ask an expert/ Talk to an expert
  • Q & A
  • Privacy Policy
  • Terms of use

© 2019-2023 Taxontips.com - Tax assistance at your Fingertips

Book Phone consultation with expert

Sitting home or at your office and don't have time to visit CA's office or don't know where to consult CA. Book your consultation with an expert practicing Chartered Accountant and get your query solved.

Book a phone consultation for 30 minutes with our expert at a very basic cost.

Book consultation

No thanks, I'm not interested!