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

Under the Income-tax Act, 2025 as reproduced, when is an interim dividend deemed to be the income of a member?

An interim dividend is deemed to be the member's income in the tax year in which the company unconditionally makes the amount available to the entitled member. Declaration by the board, the record date or later AGM approval does not determine the year.

  1. AIn the tax year in which the board declares it
  2. BIn the tax year in which the amount is unconditionally made available by the company to the entitled memberCorrect
  3. CIn the tax year in which the next AGM approves it
  4. DIn the tax year in which the record date falls

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 entitled member. Board declaration or record date alone does not decide the year.

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