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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Managerial Decisions

Meridian Ltd pays an interim dividend. Under section 7(2)(b) of the Income-tax Act, 2025 as reproduced, an interim dividend is deemed to be the income of the member in the tax year in which:

An interim dividend is deemed income of the tax year in which the company unconditionally makes the amount available to the member entitled to it, under section 7(2)(b). Board resolution or record dates are irrelevant, so payout timing can shift the year of taxation.

  1. Athe board resolves to pay it
  2. Bthe amount is unconditionally made available by the company to the entitled memberCorrect
  3. Cthe record date for the dividend falls
  4. Dthe company's annual general meeting is held

Explanation

Section 7(2)(b) provides that an interim dividend is deemed income of the tax year in which the amount is unconditionally made available by the company to the member entitled to it. The board resolution date or record date does not decide the year.

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