SINCE THE PROFIT WHICH IS DISTRIBUTED AS DIVIDEND IS A PROFIT WHICH ALREADY HAS SUFFURED CORPORATE TAX @33.66%. SO THE CONTENTION OF THE I-T DEPARTMENT THAT THERE IS A EVASION OF TAX BY DECREASING THE SALARY AND OTHER PERKS OF THE SHAREHOLDERS, WHO ARE ALSO THE DIRECTOR OF THE COMPANY, AND PAYING HIGHER DIVIDEND IS NOT TENABLE. IN FACT TAXING THE DIVIDEND ITSELF AMOUNTS TO DOUBLE TAXATION AND SHOULD BE ABOLISHED.
RE:UNFAIR
by Vidya Dhore on Feb 19, 2008 04:17 PM Permalink
See, Income in the hands of Company and in the hands of an individual (shareholders)are two different things as per the Income tax Act. So if the company pays tax on its income and then distributes it as dividend to its shareholders, again it is income of that shareholders and so it should be taxed accordingly
