Under section 194, the principal officer of an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India is required before making any payment in cash or before issuing any cheque or warrant in respect of any dividends or before making any distribution or payment to a shareholder of any dividend within the meaning of sub-clauses (a) to (e) of clause (22 ) of section 2, to deduct income-tax thereon at the rates in force. The rates for the financial year 1974-75 specified in Part II of the First Schedule to the Finance Act, 1974 are as follows :
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Income-tax
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Surcharge
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I.
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In the case of a person other than a company—
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(a) where the person is resident
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21 per cent
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2 per cent
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(b) where the person is not resident in India
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30 per cent
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3 per cent
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or
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income-tax and surcharge on income-tax in respect of the income at the rates prescribed in sub-paragraph I of paragraph A of Part III of the First Schedule to the Finance Act, 1974, if such income had been the total income,
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whichever is higher.
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II. In the case of a company—
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(a)
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where the company is a domestic company
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22 per cent
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1 per cent;
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(b)
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where the company is not a domestic company
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24.5 per cent
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1.225 per cent
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Circular : No. 139 [F. No. 275/51/74-ITJ], dated 21-6-1974
