Welcome to our new lecture. Till now we have read 2-3
sections about TDS. We have read the provision of TDS on
salary. We have read about the withdrawal from EPF. We have
also discussed about interest on securities.
Now I want to discuss about dividends on TDS. Sir, sir,
sir, what are you saying? Is TDS applicable on dividends
also? Sir, this is the point.
The government has covered all the sources from where you
can get income. If you earn money from anywhere, your TDS
will be deducted. You will take the remaining money to your
home.
We will get the tax on the income that you have earned
today. You will not deposit it. The person who is paying
you will go and deposit it.
There is a new section 194. It talks about dividends. You
all know what dividends are. It is the share of profit that
goes to the shareholders in any company. It is called
dividends.
For example, you have the shares of Reliance company. If I
tell you that it is a Reliance company and this Reliance
company has a profit of 20,000 crores. It is called profit
after tax.
This profit after tax has saved the company of 20,000
crores.
And suppose there are 1 crore shareholders of this company.
If there are 1 crore shareholders, how much dividend will
go to each shareholder? How much profit should be saved?
If you divide this symbol by 1 crore, then each shareholder
will get a dividend of 20,000 crores. Although it is a
profit, but it is changed to dividend when it is in the
hands of the shareholder.
When it is in the books of the company, then it is called
profit. As soon as you distribute it to your shareholders,
it is called dividend. Now the dividend of 20,000 crores
that Reliance company will give to any individual, will it
become income in the hands of that individual? Yes.
So should the income tax be deducted on this also? It
should be deducted according to the rules. Next year the
income tax will be deposited. So the government has said
that you don't come next year, whatever you earn, take it
this year. This year they will put the responsibility on
the Reliance company that whenever you will pay the
dividend, deduct a percentage. In this case it is 10%.
Now deduct 10% and make the payment of 18,000 rupees. In
the hands of the shareholders, 18,000 will come as income.
Although the income is 20,000, but it will be received as
18,000. And the 2,000 rupees that it is receiving, its
income tax will be done. In a way, its income tax will be
taken and the Reliance company will deposit it in the
income tax account of the shareholder.
The tax that I had to pay on this, I would have paid it
next year. In a way, they took this tax from me today. This
is a simple point. The income of the dividend is coming to
me, but now that money will be deducted from me. What was
deducted was basically the tax portion. Reliance company
will deposit it on my behalf.
Now finally, when next year comes, I will file my income
tax return.
I will tell my income from different sources.
My income came from my salary, income from business, income
from other sources.
And I have a dividend of 20,000 rupees.
I will tell the total income.
And suppose my income tax of 1 lakh rupees came out.
What does this mean?
The government says that the income that you have earned,
you will have to pay 1 lakh rupees income tax on it. I will
also tell the government at that time, that government,
government, Nirmala Tai, you are saying that 1 lakh income
tax, but these 2,000 rupees were deducted from me. You had
deducted these 2,000 rupees. You were receiving 20,000 and
you had given 18,000.
Reliance company was deducting 2,000 rupees in the name of
income tax. And Reliance called me, Mukesh Ambani sir
called me and said, Mr. Gupta, I am depositing your 2,000
rupees in the income tax account. Don't worry. We have not
taken your 2,000 rupees. I am depositing your money in the
income tax department.
So, I will go and tell Nirmala madam, that madam, you are
saying that 1 lakh tax, but Mukubhai has deposited 2,000
rupees in my account. So, that minus, how much is the
balance tax? 98,000. When you will do the final tax
payment, then this TDS, minus it from the final tax
payment. Because today you have deducted your money in the
name of tax. This is the point.
Am I clear or am I clear? Let us read its text once.
What does this section say? It was 194.
See sir, your TDS is deducting on all incomes.
Government has not left any income.
Come, what does it say? It is 194.
Rate of 10% has been told.
And when is the time?
The deduction has to be made before making any payment or
before making any distribution. Before payment, your TDS
will be deducted. But in which cases it is not applicable?
In which cases, the first case is that if the government is
receiving, suppose in Reliance company, the government has
kept some share of 1%, 2%. And what is the government
getting? Dividend is being received by Reliance company.
So, will the government itself get the tax deducted?
Government will not get its tax deducted. It will say that
these are the provisions of TDS that money is deducted.
Leave it to the common people. We will take our entire
money in the truck. These are the sections of common
people. Keep us away from them.
So, the government very cleverly removed its name and said
that these provisions of TDS do not apply to dividend
credited or paid to LIC, GIC, any subsidiary of these
companies or any other person who notifies the central
government.
And what else is there in this? Tax will not be deducted
even if you are giving dividend up to Rs. 5000 from account
pay cheque etc. Not in cash. If you pay dividend from any
other medium other than cash, my dear, and that dividend is
up to Rs. 5000, then no tax will be imposed on you.
This is the point. We will meet in the next video on
another section. Thank you very much.