Dividends
Dividends.
194. 33 The principal officer of an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India, shall, before making any payment in cash or before issuing any cheque or warrant in respect of any dividend or before making any distribution or payment to a shareholder, of any dividend within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) of clause (22) of section 2, deduct from the amount of such dividend, income-tax 34[***] at the rates inforce:
35[Provided that no such deduction shall be made in the case of a shareholder, being an individual, who is resident in India, of a company in which the public are substantially interested, if—
(a) the dividend is paid by such company by an account payee cheque; and
(b) the amount of such dividend or, as the case may be, the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, does not exceed 36[two thousand five hundred rupees]:
37Provided 38[further] that where in the case of any shareholder, not being a company, the 38a[Assessing] Officer gives a certificate in writing in the prescribed manner that to the best of his belief the total income 39[***] of the shareholder will be less than the minimum liable to income-tax, the person responsible for paying any dividend to the shareholder shall so long as the certificate is in force pay the dividend without any deduction.
33. See rules 27, 30(1) and 37(2) and Form No. 26.
34. "and super-tax" omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
35. Substituted for the following proviso by the Finance Act, 1984, w.e.f. 1-6-1984 : "Provided that no such deduction shall be made in the case of any shareholder, not being a company, if—
(a) the shareholder is resident in India ;
(b) the amount of such dividend does not exceed two hundred and fifty rupees; and
(c) the shareholder furnishes to the person responsible for paying the dividend a statement in writing in the prescribed form and verified in the prescribed manner declaring that his estimated total income of the previous year in which such dividend is to be included under the provisions of section 8 will be less than the minimum liable to income-tax:"
The aforesaid proviso was inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-10-1977.
36. Substituted for "one thousand rupees" by the Finance Act, 1987, w.e.f. 1-6-1987.
37. See rules 28(2) and 29 and Form Nos. 14 and 15.
38. Inserted by the Finance (No. 2) Act, 1977, w.e.f. 1-10-1977.
38a. Substituted for "Income-tax" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.
39. "or the total world income" omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
[AS AMENDED BY THE FINANCE ACT, 1988]