TMI BlogInstructions for deduction of tax at source from dividends payable/paid by domestic company to foreign companies after May 28, 1971 at the rate of 24.5 per cent specified in Part II of First Schedule to Finance (No. 2) Act, 1971X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by domestic company to foreign companies after May 28, 1971 at the rate of 24.5 per cent specified in Part II of First Schedule to Finance (No. 2) Act, 1971 1. I am directed to say that in the Finance (No. 2) Bill, 1971, introduced in Parliament on May 28, 1971, it has been proposed to amend the provisions in section 80M. Under the scheme of the said provisions, inter-corporate dividends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds is worked out as under : Dividend income, say Deduction u/s 80M Net dividend Rate of tax on ordinary income Effective rate on the whole of the dividend Rs. per cent per cent per cent per cent In the case of Sl. No. ( i ) above 100 80 20 70 14 In the case of Sl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty industry was 14 per cent. As a corollary to the amendment proposed in section 80M, necessary modification has also been made in item 2( b ) of Part II of the First Schedule to the said Bill with the result that the rate for deduction of tax in respect of dividends paid by any domestic company to a foreign company will now uniformly be 24.5 per cent. As it is intended to secure collection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank will insist on the shortfall in the tax deduction being made up before authorising remittance. As regards dividend payments to be made after May 28, 1971, the Reserve Bank would, no doubt, ensure that tax is deducted at the rate of 24.5 per cent and only the balance is allowed to be remitted. Circular : No. 61 [ F. No. 275/37/71-ITJ ], dated 19-6-1971 . - Circular - Trade Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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