HomeTop NewsBudget 2021: Tax Deduction On Dividend Paid By Any Mode Other Than...

Budget 2021: Tax Deduction On Dividend Paid By Any Mode Other Than Cash

Bad debts written off from the books of account is permitted as a deduction from the taxable earnings.

Tax deduction from dividends is mandatory for each Indian corporation or a corporation that declares and tends to make payment of dividends inside India.



However, no tax shall be deducted from the payment of dividend to an person shareholder, ought to the payment be produced by any mode other than money and the aggregate quantity of dividend paid or distributed to him through a monetary year does not exceed Rs 5,000.



According to on line tax consultancy Taxmann, the relaxation from the deduction of tax is readily available if the dividend is paid by any mode other than money.

Taxmann’s recommendation is that like other provisions, Section 194 ought to have the positive list of the permissible mode of payment, that is, an account payee cheque or account payee bank draft or use of electronic clearing technique by means of a bank account or by means of such other electronic mode as may possibly be expected.

A equivalent amendment is also advised in Sections 80D, 80GGA, 80G and 36(1)(ib).

Bad debts ought to be deductible beneath section 57

The negative debts written off from the books of account is permitted as a deduction from the earnings taxable beneath the head ‘Profits and Gains from Business or Profession’. Whereas on the counterpart such a claim is not allowable even though computing the earnings beneath the head ‘Income from other sources’.

According to Taxmann, the deductions allowable from the residuary earnings is specified in section 57.

Taxmann’s suggestions for the Union Budget 2021

“Income from other sources is a residuary head of income and sweeps in all such taxable incomes which fall outside the other four heads of income. Section 57 specifically provides the list of expenditure which are allowed to be deducted from the income taxable under the head of other sources. Such discriminatory provision causes hardships to the assessee. Thus, it is recommended that deduction for bad debts shall be allowed under section 57 while computing the income from other sources,” Taxmann notes.

Stay Connected

16,985FansLike
2,458FollowersFollow

Must Read

Related News

LEAVE A REPLY

Please enter your comment!
Please enter your name here