Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

DDT on deemed dividend covered under section 2(22)(e)

Loan or advance given by closely held companies to its shareholders, who have substantial interest in such company, or to a concern in which such shareholder has substantially interest, is deemed as dividend under Section 2(22)(e) of the Income-tax Act. Up to Assessment Year 2018-19, deemed dividend under section 2(22)(e) was taxable in the hands of the shareholder and company was not liable to pay dividend distribution tax (DDT) on such dividend.

However, with effect from Assessment Year 2019-20, dividend distribution tax at the rate of 30% has been levied on such deemed dividend. Consequently, shareholder is not liable to pay any tax on such dividend. Corresponding changes have been made in new ITR forms to incorporate the effect of such amendment made by the Finance Act, 2018 and a new entry for deemed dividend under Section 2(22)(e) has inserted in Schedule DDT.

This change will impact [ITR 6]


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