Taxability of dividend received from foreign companies
The term dividend has been defined in Section 2(22) in an inclusive manner which includes the Distribution of accumulated profits to shareholders.
The taxability of dividends has undergone changes over the past few years both from the perspective of an Indian company declaring dividends and an Indian company receiving dividends from a foreign company.
Dividend income is chargeable to tax in the source country as well as the country of residence of assessee “herein refer as India”. Further to avoid the double taxation India provides credit of tax paid in the source country.
Dividend income is taxable as per provisions of the Act or as per relevant DTAA, whichever is more beneficial.
Dividend is received by an Indian company or an individual from shares of a foreign company – Where such dividend is taxable as income from other sources, the rate of tax applicable shall be the rate which is applicable to such Indian company, as per the provisions of the Act or as per relevant DTAA, whichever is more beneficial. Further, in the case of an individual where the dividend income is taxable as income from other sources, the same shall be taxable as per the provisions of the Act or as per relevant DTAA, whichever is more beneficial . From such tax calculated, where there is any incidence of withholding tax on such dividend received, the withholding tax can be availed as tax credit against the tax liability in India
In a major relief to taxpayers, the government has announced significant changes to the Goods and Services Tax (GST) laws, providing relief to businesses by waiving specific interest and penalties on previous tax demands. This new provision, which will take effect on November 1, falls under Section 128A and allows GST authorities to provide waivers, thereby decreasing the compliance burden for taxpayers.
The new provision aims at cases where tax demands were issued under Section 73 of the GST Act, which pertains to non-fraudulent tax matters. This decision was made during the GST Council’s 53rd meeting, with the goal of resolving conflicts caused by misconceptions or misinterpretations of the law, rather than deliberate tax evasion.
Announced in Budget 2024, section 128A is a new section that provides some relief to individuals and companies registered under GST. This relief, which is a conditional waiver scheme, allows total waiver of interest and penalty for specified non-fraudulent GST demand notices related to FY 2017-18 to 2019-20. Do note that this scheme only waives off the interest and penalty amount, you still need to pay the tax demand amount.
To benefit from the waiver, businesses must accept the tax demand and settle the amount due by March 31, 2025. Once the tax is paid, the related interest and penalties will be waived, effectively resolving the dispute. Taxpayers who have already paid their penalties and interest will not qualify for refunds under this scheme.
