Section 115-O of ITA, 1961 : Section 115-O: Tax On Distributed Profits Of Domestic Companies

Explanation using Example

Imagine a domestic company, ABC Pvt. Ltd., which has made a profit for the financial year 2022-23. The board of directors decides to distribute a part of these profits to its shareholders in the form of dividends. According to Section 115-O of the Income Tax Act, 1961, ABC Pvt. Ltd. is required to pay a tax on these distributed profits at a rate of 15%. This tax is over and above the regular income tax the company pays on its total income.

Let's say ABC Pvt. Ltd. has a subsidiary company XYZ Pvt. Ltd., from which it has received dividends during the financial year. If XYZ Pvt. Ltd. has already paid the tax on distributed profits for these d...

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