INCOME TAX & INTERNATIONAL TAX
Tax on certain dividend received from Foreign Companies:
Consider the following case:
- An Indian Company ICO has made equity investment in an overseas foreign Company ("Specified FCO") under the Overseas Direct Investment (ODI) route;
- The specified FCO has during a financial year declared, distributed or paid dividend to the ICO;
Taxability:
- The dividend so received by the ICO will be subject to Income Tax at 15% only.
- "Specified FCO" means a foreign Company in which the ICO holds 26% or more in nominal value of equity share capital of the Company.
If the dividend so received by the ICO from the specified FCO is further declared, distributed or paid by the ICO in the same financial year, no further Dividend Distribution Tax under section 115-O will be payable by the ICO provided:
- Tax @ 15@ has already been paid under Section 115BBD and
- The ICO holds more than 50% in the nominal value of the equity share capital of the Foreign Company.
For the purpose of this chapter Dividend does not include deemed dividend under section 2(22)(e) of The Income Tax Act.
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