Amendment of section 115-O.
53. In section 115-O of the Income-tax Act, in sub-section (1A), in clause (i), with effect from the 1st day of July, 2012,—
(i) in sub-clause (a), the word “and” shall be inserted at the end;
(ii) in sub-clause (b), for the words “paid tax under this section on such dividend; and”, the words “paid the tax which is payable under this section on such dividend:” shall be substituted;
(iii) sub-clause (c) shall be omitted.
Notes on Clauses:
Clause 53 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies.
The existing provisions in sub-section (1A) of the aforesaid section 115-O provide that the amount of dividends 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 amount of 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.
The said sub-section also provides that the same amount of dividend shall not be reduced more than once.
It is proposed to amend clause (i) of aforesaid sub-section (1A) so as to provide that in case domestic company receives during the year any dividend from any of its subsidiary and the subsidiary has paid dividend distribution tax, which is payable, on such dividend, then the said amount, if it is distributed as dividend by the domestic company being the holding company in the same year, shall not be subject to dividend distribution tax under the aforesaid section. It is also proposed to omit sub-clause (c), so as to remove the condition that such domestic company is not a subsidiary of any other company.
This amendment will take with effect from 1st July, 2012.
