Insertion of new section 115 BBDA.
50. After section 115BBD of the Income-tax Act, the following section shall be inserted with effect from the 1st day of April, 2017, namely:-
Tax on certain dividends received from domestic companies.
‘115BBDA. (1) Notwithstanding anything contained in this Act, where the total income of an assessee, being an individual, Hindu undivided family or a firm, resident in India, includes any income exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company, the income-tax payable shall be the aggregate of-
(a) the amount of income-tax calculated on the income by way of such dividends, at the rate of ten per cent.; and
(b) the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the amount of income by way of dividends.
(2) No deduction in respect of any expenditure or allowance or set off of loss shall be allowed to the assessee under any provision of this Act in computing the income by way of dividends referred to in clause (a) of sub-section (1).
(3) In this section, “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.’.
Notes on Clauses:
Clause 50 of the Bill seeks to insert a new section 115BBDA in the Income-tax Act relating to tax on certain dividends received from domestic companies.
The provisions of the Income-tax Act provide that dividend income shall be exempt if dividend distribution tax is paid on such income.
It is proposed to insert a new section 115BBDA in the said Act so as to provide that any income by way of dividend declared, distributed or paid by a domestic company, in excess of ten lakh rupees shall be chargeable to tax at the rate of ten per cent. in the case of an individual, Hindu undivided family or a firm who is a resident in India.
It is further proposed to provide that no deduction in respect of any expenditure or allowance or set off of loss shall be allowed in computing the income by way of dividend and to define the term dividends.
This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.
