1049. Deduction of tax at source, as per the rate specified in First Schedule to Finance Act, 1987, to be increased by a sur­charge at the rate of 5 per cent – Effective from 16-12-1987

1. I am directed to say that according to the provisions of 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 shall, before making any payment in cash or before issuing any cheque or warrant in respect of any dividend or before making any distribution or payment to a shareholder of any dividend within the meaning of any sub-clause under section 2(22), deduct income-tax at source during the financial year 1987-88 at the rate of 25 per cent as laid down in the Finance Act, 1987. However, no such deduction shall be made in the case of a resident individual shareholder of a company in which the public are substantially interested if the dividend is paid by an account payee cheque and the aggregate of the amounts of such dividends distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder does not exceed Rs. 2,500.

2. It is brought to your notice that vide section 3 of the Fi­nance (Amendment) Act, 1987, the First Schedule to the First Finance Act has been amended with immediate effect. According to this amendment, the amount of income-tax computed on the basis of the aforesaid rates laid down in the Finance Act, 1987 shall be increased by a surcharge for the purpose of the Union calculated at the rate of 5 per cent of such income-tax. The levy of sur­charge has come into force with effect from 16-12-1987.

Circular : No. 509 [F. No. 275/24/88-IT(B)], dated 23-2-1988.

More Under Income Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

September 2021