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CMA Final · Direct Tax Laws and International Taxation · Interest and Fees

Under the Income-tax Act, 2025, a foreign company's total income for a tax year consists only of dividend from an Indian company (not from an IFSC unit) and royalty under an approved agreement with an Indian concern. TDS has been deducted at not less than the specified rates. Which statement about its filing obligation is correct?

No return is needed. Under section 207(8), where total income consists only of the specified dividend and royalty or technical fee income and tax was deducted at not less than the specified rates, the assessee need not furnish a return. No monetary threshold applies.

  1. AIt must file a return because it is a company
  2. BIt must file a return because royalty is involved
  3. CIt need not file a return, since its total income consists only of specified dividend and royalty income and tax was deducted at not less than the specified ratesCorrect
  4. DIt need not file a return only if the dividend is below a prescribed limit

Explanation

Section 207(8) exempts an assessee from furnishing a return where total income consists only of income in sub-section (1) (Table Sl. Nos. 1 to 7) and sub-section (2) (Sl. Nos. 1 and 2), and TDS was at a rate not less than the specified rates. Dividend and approved royalty both fall within these. No monetary limit is stated, so the other options are wrong.

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