Tax deduction from dividends is necessary for each Indian firm or an organization that declares and makes cost of dividends inside India.
Nevertheless, no tax shall be deducted from the cost of dividend to a person shareholder, ought to the cost be made by any mode aside from money and the mixture quantity of dividend paid or distributed to him throughout a monetary yr doesn’t exceed Rs 5,000.
Based on on-line tax consultancy Taxmann, the comfort from the deduction of tax is obtainable if the dividend is paid by any mode aside from money.
Taxmann’s advice is that like different provisions, Part 194 ought to have the constructive listing of the permissible mode of cost, that’s, an account payee cheque or account payee financial institution draft or use of digital clearing system by means of a checking account or by means of such different digital mode as could also be required.
The same modification can be advisable in Sections 80D, 80GGA, 80G and 36(1)(ib).
Unhealthy money owed ought to be deductible underneath part 57
The dangerous money owed written off from the books of account is permitted as a deduction from the revenue taxable underneath the pinnacle ‘Income and Beneficial properties from Enterprise or Career’. Whereas on the counterpart such a declare will not be allowable whereas computing the revenue underneath the pinnacle ‘Revenue from different sources’.
Based on Taxmann, the deductions allowable from the residuary revenue is laid out in part 57.
Taxmann’s suggestions for the Union Price range 2021
“Revenue from different sources is a residuary head of revenue and sweeps in all such taxable incomes which fall outdoors the opposite 4 heads of revenue. Part 57 particularly offers the listing of expenditure that are allowed to be deducted from the revenue taxable underneath the pinnacle of different sources. Such discriminatory provision causes hardships to the assessee. Thus, it’s endorsed that deduction for dangerous money owed shall be allowed underneath part 57 whereas computing the revenue from different sources,” Taxmann notes.