JANUARY 24, 2017

By Ramakant Tiwari, Calcutta

AOs are disputing STCG as business income on various grounds. So govt. should clearly demarcate the holding period, say 3 months will be business income and above 3 months would be STCG. This will save assessee falling prey to the assessing officers and litigations will reduce and further this change should be retrospective and if this is done a lot many cases will vanish at various stages.

Dividend Income

This income is taxed four times at present.

1) Shareholder is paying tax on Income earned through company as Income Tax.

2) Again when this income is given to shareholder, Company pays DDT on this.

3) Since dividend income is free in hands of Shareholder, expenses are disallowed U/S 14A and   shareholder has to pay tax on disallowance. This is really surprising that after paying tax two times how come the govt. thinks this is tax free for section 14A. 

4) Again if the dividend income is more than 10 lacs, assesse has to pay tax @ 10%.

So, in fact CSR 2%, Income Tax 34.608%, DDT 20.357% and tax on Dividend (above 10 lacs) 10% that is after paying all total 54.07% tax on Rs100 earned govt. is saying it is tax-free and disallowances will be made under section 14A, what a tyranny!.

Suggestion: let this income be taxable in the hands of shareholders at applicable rates simply and no DDT.