Section 115 O of Income Tax Act "Tax on distributed profits of domestic companies"
115-O. (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 90[but on
or before the 31st day of March, 2020], 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 fifteen per cent:
Provided that in respect of dividend referred to in
sub-clause (e) of clause (22) of section 2, this sub-section
shall have effect as if for the words "fifteen per cent",
the words "thirty per cent" had been substituted.
(1A) The amount referred to in sub-section (1) shall be
reduced by,-.
(i) the amount of dividend, if any, received by the
domestic company during the financial year, if such dividend
is received from its subsidiary and,-
(a) where such subsidiary is a domestic company, the
subsidiary has paid the tax which is payable under this
section on such dividend; or
(b) where such subsidiary is a foreign company, the tax is
payable by the domestic company under section 115BBD on such
dividend:
Provided that the same amount of dividend shall not be taken
into account for reduction more than once;
(ii) the amount of dividend, if any, paid to any person for,
or on behalf of, the New Pension System Trust referred to in
clause (44) of section 10.
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.
(1B) For the purposes of determining the tax on distributed
profits payable in accordance with this section, any amount
by way of dividends referred to in sub-section (1) as
reduced by the amount referred to in sub-section (1A)
[hereafter referred to as net distributed profits], shall be
increased to such amount as would, after reduction of the
tax on such increased amount at the rate specified in
sub-section (1), be equal to the net distributed profits:
Provided that this sub-section shall not apply in respect of
dividend referred to in sub-clause (e) of clause (22) of
section 2.
(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.
(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
dividend:
Provided that the provisions of this sub-section shall cease
to have effect from the 1st day of June, 2011.
(7) No tax on distributed profits shall be chargeable under
this section in respect of any amount declared, distributed
or paid by the specified domestic company by way of
dividends (whether interim or otherwise) to a business trust
out of its current income on or after the specified date:
Provided that nothing contained in this sub-section shall
apply in respect of any amount declared, distributed or
paid, at any time, by the specified domestic company by way
of dividends (whether interim or otherwise) out of its
accumulated profits and current profits up to the specified
date.
Explanation.-For the purposes of this sub-section,-
(a) "specified domestic company" means a domestic company in
which a business trust has become the holder of whole of the
nominal value of equity share capital of the company
(excluding the equity share capital required to be held
mandatorily by any other person in accordance with any law
for the time being in force or any directions of Government
or any regulatory authority, or equity share capital held by
any Government or Government body);
(b) "specified date" means the date of acquisition by the
business trust of such holding as is referred to in clause
(a).
(8) Notwithstanding anything contained in this section, no
tax on distributed profits shall be chargeable in respect of
the total income of a company, being a unit of an
International Financial Services Centre, deriving income
solely in convertible foreign exchange, for any assessment
year on 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, 2017, out of its current
income 91[or income accumulated as a unit of International
Financial Services Centre after the 1st day of April, 2017],
either in the hands of the company or the person receiving
such dividend.
Explanation.-For the purposes of this sub-section,-
(a) "International Financial Services Centre" shall have the
same meaning as assigned to it in clause (q) of section 2 of
the Special Economic Zones Act, 2005 (28 of 2005);
(b) "unit" means a unit established in an International
Financial Services Centre, on or after the 1st day of April,
2016;
(c) "convertible foreign exchange" means foreign exchange
which is for the time being treated by the Reserve Bank of
India as convertible foreign exchange for the purposes of
the Foreign Exchange Management Act, 1999 (42 of 1999) and
the rules made thereunder.