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Book Cover

Taxation of Dividends

2025 Edition
Author
Divya Jokhakar, Chartered Accountant
Highlights
The Core
  • A Complete, up-to-date reference on dividend taxation under the Income-tax Act 1961 and in the new Act, 2025
  • Integrates legislation, case laws, CBDT circulars, examples, FAQs and latest amendments
INR 270/-
(30% off  INR 385/-)
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Who can benefit

Chartered Accountants, Advocates, Trade & Industry Professionals

Publishers

Taxmann Publications (P.) Ltd

Commissioned by

Bombay Chartered Accountants' Society

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Book Overview

Taxation of Dividends authored by CA Divya Jokhakar, provides a comprehensive analysis of the law and practice relating to the taxation of dividend income in India. It traces the evolution of dividend taxation, from classical taxation to the Dividend Distribution Tax (DDT) regime and back to shareholder-level taxation, highlighting key legislative amendments, judicial interpretations, and policy developments over time.

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The book explains in detail the scope and application of relevant provisions of the Income-tax Act, 1961, including sections 2(22), 8, 10(34), 115-O, 115BBDA, 80M, and others, along with important case laws and CBDT clarifications. It also discusses issues relating to deemed dividends, dividend stripping, foreign dividends, buy-back of shares, and the impact of Double Taxation Avoidance Agreements (DTAAs).

The publication is designed to serve both as a practical guide for tax professionals and as a reference manual for students and academicians, providing clarity through structured chapters, examples, and FAQs. The book aims to simplify complex concepts and offer insights into the evolving landscape of dividend taxation in India.

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The Key Features
Historical & Policy Evolution

→ Complete timeline of dividend taxation (1961–2025) and rationale for major shifts

Deep Dive into Section 2(22)

→ Accumulated profits, bonus issues, liquidation, capital reduction & deemed dividends

Modern Issues (Post–1 Oct. 2024)

→ Buy-backs now taxed as dividends under section 2(22)(f); TDS & treaty implications

Characterisation & Deductibility

→ Business income vs. other sources; interest deduction limits under section 57

Tax Rates & Treaty Relief

→ Domestic rates vs. DTAA/MFN/PPT rules under the MLI

Case-Law Framework

→ Leading rulings shaping dividend tax practice

Practical FAQs

→ Chargeability, TDS timing, dividend stripping, NR filing & advance tax

Sample Chapter

Get a preview of the comprehensive content with this sample chapter from the book.

Section 8: Income from Dividends - Year of Taxability
View Sample
Index of Content

1. Background and Developments Till Date
1.1 Background
1.2 History of Taxation of Dividends
1.3 Developments in the last few years
2. Definition of Dividend
2.1 General
2.2 Definition under the Act
2.3 The concept of deemed dividend
2.4 Payments not considered as deemed dividend
3. Section 8: Income from Dividends - Year of Taxability
3.1 General
3.2 Year of chargeability
3.3 Issues
4. Dividends Characterization and Deductibility of Expenditure
4.1 Background and General
4.2 Taxability Computation and timing
4.3 Deductions
5. Dividend Impact of Status
5.1 Background and General
5.2 Taxability
5.3 Deductions
5.4 Dividend income - Foreign Company
6. Dividend Stripping - Tax Aspects
6.1 Introduction
6.2 Restriction on claim of expenditure (Sec. 14A) and dis-allowance of loss in certain cases 94(7)
6.3 Important Judicial precedents
7. Deduction u/s 80M
7.1 Background and General
7.2 Reintroduction of 80M
7.3 Applicability
7.4 Implications of section 80M (in various situations)
8. Applicable Tax Rates and Tax Deduction at Source on Dividends
8.1 Taxability of Dividends
8.2 Taxability in the case of different investors
8.3 Tax Rates under the Double Tax Avoidance Agreements (DTAA) / Multi-Lateral Instruments (MLI)
8.4 Advantages of a Tax treaty with respect to incomes
8.5 Tax Deducted at Source
8.6 Effect of section 206AA and section 206AB on the rates of TDS
9. Judicial Precedents
9.1 Applicability of AY for payment of Dividend Distribution Tax
9.2 Tax rate under Article 10 of India-Switzerland DTAA can be used for deduction of taxes u/s 115-O of the Income Tax Act
9.3 Payment by way of buyback of shares made by the assessee, to its related party, in excess of FMV of the share of the assessee company would fall in the ambit of Section 2(22)(e), i.e., Deemed Dividend
9.4 Assessee society received dividend income from an Omani Company on which it was not liable to pay any tax in Oman by virtue of exemption granted as per Omani Tax laws – assessee entitled to tax credit in India
9.5 Where dividend was earned and the same is exempt, the provisions of section 14A would get attracted and the dominant purpose theory was not acceptable
9.6 The character of dividend income would remain business income and therefore eligible for set-off of losses
10. Frequently Asked Questions
10.1 Chargeability & Taxability
10.2 Tax Rate and Tax Deducted at Source
11. Buy Back Of Shares (Now Taxed As Dividend)
11.1 Taxation on Buy Back before 1st October, 2024
11.2 Amendment in the Finance Act, 2024
11.3 Implications in the hands of payer and payee
11.4 Computation of Income along with Treaty Implications
11.5 Issues and Questions
11.6 Remarks and Related Case laws impacting the amendment
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