What is Tax on distributed income to shareholders
Interest payable for non-payment of tax by company? Section 115QA
and 115QB of
Income Tax Act 1961
Tax on distributed income to shareholders and Interest
payable for non-payment of tax by company are
defined under sections 115QA and 115QB of Income Tax Act 1961.
Provisions under these Sections are :
Section 115QA of Income Tax Act "Tax on
distributed income to shareholders"
Section 115QA. (1) Notwithstanding anything contained in
any other provision of this Act, in addition to the
income-tax chargeable in respect of the total income of a
domestic company for any assessment year, any amount of
distributed income by the company on buy-back of shares (not
being shares listed on a recognised stock exchange) from a
shareholder shall be charged to tax and such company shall
be liable to pay additional income-tax at the rate of twenty
per cent on the distributed income.
Explanation.-For the purposes of this section,-
(i) "buy-back" means purchase by a company of its own
shares in accordance with the provisions of section 77A of
the Companies Act, 1956 (1 of 1956);
(ii) "distributed income" means the consideration paid by
the company on buy-back of shares as reduced by the amount
which was received by the company for issue of such shares.
(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 the distributed
income under sub-section (1) shall be payable by such
(3) The principal officer of the domestic company and the
company shall be liable to pay the tax to the credit of the
Central Government within fourteen days from the date of
payment of any consideration to the shareholder on buy-back
of shares referred to in sub-section (1).
(4) The tax on the distributed income by the company
shall be treated as the final payment of tax in respect of
the said income 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 income which has been charged to tax under
sub-section (1) or the tax thereon.
Section 115QB of Income Tax Act "Interest payable
for non-payment of tax by company"
Section 115QB. Where the principal officer of the
domestic company and the company fails to pay the whole or
any part of the tax on the distributed income referred to in
sub-section (1) of section 115QA, within the time allowed
under sub-section (3) of that section, he or it shall be
liable to pay simple interest at the rate of one per cent
for every month or part thereof on the amount of such tax
for the period beginning on the date immediately after the
last date on which such tax was payable and ending with the
date on which the tax is actually paid.