Income Tax Act, 2025
Section 5: Ins. by Act 13 of 2018, s. 40 (w.e.f. 12018).
5. Ins. by Act 13 of 2018, s. 40 (w.e.f. 12018).
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1[(1A) The amount referred to in sub-section (1) shall be reduced by,—
2[(i) the amount of dividend, if any, received by the domestic company during the financial year,
if such dividend is received from its subsidiary and,—
(a) where such subsidiary is a domestic company, the subsidiary has paid the tax which is
payable under this section on such dividend; or
(b) where such subsidiary is a foreign company, the tax is payable by the domestic company
under section 115BBD on such dividend:
Provided that the same amount of dividend shall not be taken into account for reduction more
than once;]
(ii) the amount of dividend, if any, paid to any person for, or on behalf of, the New Pension
System Trust referred to in clause (44) of section 10.
Explanation.—For the purposes of this sub-section, a company shall be a subsidiary of another
company, if such other company, holds more than half in nominal value of the equity share capital of the
company.]
3[(1B) For the purposes of determining the tax on distributed profits payable in accordance with this
section, any amount by way of dividends referred to in sub-section (1) as reduced by the amount referred
to in sub-section (1A) [hereafter referred to as net distributed profits], shall be increased to such amount
as would, after reduction of the tax on such increased amount at the rate specified in sub-section (1), be
equal to the net distributed profits.]
4[Provided that this sub-section shall not apply in respect of dividend referred to in sub-clause (e) of
clause (22) of section 2.]
(2) Notwithstanding that no income-tax is payable by a domestic company on its total income
computed in accordance with the provisions of this Act, the tax on distributed profits under
sub-section (1) shall be payable by such company.
(3) The principal officer of the domestic company and the company shall be liable to pay the tax on
distributed profits to the credit of the Central Government within fourteen days from the date of—
(a) declaration of any dividend; or
(b) distribution of any dividend; or
(c) payment of any dividend,
whichever is earliest.
(4) The tax on distributed profits so paid by the company shall be treated as the final payment of tax
in respect of the amount declared, distributed or paid as dividends and no further credit therefor shall be
claimed by the company or by any other person in respect of the amount of tax so paid.
(5) No deduction under any other provision of this Act shall be allowed to the company or a
shareholder in respect of the amount which has been charged to tax under sub-section (1) or the tax
thereon.
5[(6) Notwithstanding anything contained in this section, no tax on distributed profits shall be
chargeable in respect of the total income of an undertaking or enterprise engaged in developing or
developing and operating or developing, operating and maintaining a Special Economic Zone for any
assessment year on any amount declared, distributed or paid by such Developer or enterprise, by way of
dividends (whether interim or otherwise) on or after the 1st day of April, 2005 out of its current income
either in the hands of the Developer or enterprise or the person receiving such dividend 6*** ]:
1. Subs. by Act 33 of 2009, s. 47, for sub-section (1A) (w.r.e.f. (12009). Earlier sub-section (1A) was inserted by
Act 18 of 2008, s. 24 (w.e.f. 12008).
The amount referred to in sub-section
shall be reduced by,—
2[
the amount of dividend, if any, received by the domestic company during the financial year,
if such dividend is received from its subsidiary and,—
where such subsidiary is a domestic company, the subsidiary has paid the tax which is
payable under this section on such dividend; or
where such subsidiary is a foreign company, the tax is payable by the domestic company
under section 115BBD on such dividend:
Provided that the same amount of dividend shall not be taken into account for reduction more
than once;]
the amount of dividend, if any, paid to any person for, or on behalf of, the New Pension
System Trust referred to in clause
of section 10.
Explanation.—For the purposes of this sub-section, a company shall be a subsidiary of another
company, if such other company, holds more than half in nominal value of the equity share capital of the
company.]
3[
For the purposes of determining the tax on distributed profits payable in accordance with this
section, any amount by way of dividends referred to in sub-section
as reduced by the amount referred
to in sub-section
[hereafter referred to as net distributed profits], shall be increased to such amount
as would, after reduction of the tax on such increased amount at the rate specified in sub-section
of
clause
of section 2.]
Notwithstanding that no income-tax is payable by a domestic company on its total income
computed in accordance with the provisions of this Act, the tax on distributed profits under
sub-section
shall be payable by such company.
The principal officer of the domestic company and the company shall be liable to pay the tax on
distributed profits to the credit of the Central Government within fourteen days from the date of—
declaration of any dividend; or
distribution of any dividend; or
payment of any dividend,
whichever is earliest.
The tax on distributed profits so paid by the company shall be treated as the final payment of tax
in respect of the amount declared, distributed or paid as dividends and no further credit therefor shall be
claimed by the company or by any other person in respect of the amount of tax so paid.
No deduction under any other provision of this Act shall be allowed to the company or a
shareholder in respect of the amount which has been charged to tax under sub-section
or the tax
thereon.
5[
Notwithstanding anything contained in this section, no tax on distributed profits shall be
chargeable in respect of the total income of an undertaking or enterprise engaged in developing or
developing and operating or developing, operating and maintaining a Special Economic Zone for any
assessment year on any amount declared, distributed or paid by such Developer or enterprise, by way of
dividends (whether interim or otherwise) on or after the 1st day of April, 2005 out of its current income
either in the hands of the Developer or enterprise or the person receiving such dividend 6*** ]:
1. Subs. by Act 33 of 2009, s. 47, for sub-section
(w.r.e.f.
was inserted by
Act 18 of 2008, s. 24 (w.e.f. 12008).