Amended and updated notes on section 115BBD of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to tax on certain dividends received from foreign companies.
Chapter XII (Sections 110 to 115BBG) of the Income Tax Act 1961 deals with the provisions related to determination of tax in certain special cases. Section 115BBD of IT Act 1961-2022 provides for tax on certain dividends received from foreign companies.
Recently, we have discussed in detail section 115BBC (Tax on income from units of an open-ended equity oriented fund of the Unit Trust of India or of Mutual Funds) of IT Act 1961.
Today, we learn the provisions of section 115BBD of Income-tax Act 1961 as amended by the Finance Act 2022. The amended provision of section 115BBD is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 115BBD of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.
Section-115BBD: Tax on certain dividends received from foreign companies
Section 115BBD (1):
Where the total income of an assessee, being an Indian company, includes any income by way of dividends declared, distributed or paid by a specified foreign 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 fifteen per cent; and
- (b) the amount of income-tax with which the assessee would have been chargeable had its total income been reduced by the aforesaid income by way of dividends.
Section 115BBD (2):
Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of this Act in computing its income by way of dividends referred to in sub-section (1).
Section 115BBD (3):
In this section,—
(i) “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;
(ii) “specified foreign company” means a foreign company in which the Indian company holds twenty-six per cent or more in nominal value of the equity share capital of the company.
Section 115BBD (4):
The provisions of this section shall not apply to any assessment year beginning on or after the 1st day of April, 2023.
[Sub-section(4) of section 115BBD newly inserted w.e.f. 1-April-2023 by the Finance Act 2023]