The Indian income tax system is governed by a set of rules and regulations laid down in the Income Tax Act, 1961. Section 115BCA is one such section that was introduced in the Income Tax Act as a part of the Finance Act, 2016. This section lays down the provisions for levy of additional income tax on income earned by certain domestic companies.
Heading: Overview of Section 115BCA
Section 115BCA of the Income Tax Act was introduced to levy an additional income tax on domestic companies whose income exceeds Rs. 10 crore. This section is applicable to companies that are not engaged in any business of exploration, production or refining of petroleum or natural gas.
Applicability of Section 115BCA
As per the provisions of Section 115BCA, the additional income tax is applicable to domestic companies that satisfy the following conditions:
- The company is not engaged in any business of exploration, production or refining of petroleum or natural gas.
- The total income of the company exceeds Rs. 10 crore for the previous year.
- The company has declared and distributed dividends during the previous year.
Rate of Tax
The additional income tax under Section 115BCA is levied at the rate of 10% on the income declared and distributed as dividends by the domestic company. This tax is in addition to the income tax payable by the company under the normal provisions of the Income Tax Act.
Computation of Tax
The additional income tax under Section 115BCA is computed on the income declared and distributed as dividends by the domestic company. The tax is levied on the gross amount of dividend declared and distributed during the previous year. The company is required to pay this tax within 14 days from the date of declaration and distribution of dividends.
Exemption from Tax
Domestic companies that are exempted from the payment of income tax under any provision of the Income Tax Act are also exempted from the payment of additional income tax under Section 115BCA.
Conclusion
Section 115BCA of the Income Tax Act, 1961 was introduced to levy an additional income tax on domestic companies whose income exceeds Rs. 10 crore and have declared and distributed dividends during the previous year. The tax is levied at the rate of 10% on the gross amount of dividend declared and distributed. It is important for domestic companies to comply with the provisions of this section to avoid any penalties or legal action.
Other Related Blogs: Section 144B Income Tax Act
Frequently Asked Questions (FAQs)
Q1. What is Section 115BCA of the Income Tax Act?
Section 115BCA is a provision of the Income Tax Act, introduced in 2016, which imposes an additional income tax on certain domestic companies that declare and distribute dividends.
Q2. Which companies are covered under Section 115BCA?
Domestic companies whose total income exceeds Rs. 10 crore and who have declared and distributed dividends during the previous year are covered under Section 115BCA, provided they are not engaged in any business of exploration, production or refining of petroleum or natural gas.
Q3. What is the rate of tax under Section 115BCA?
The rate of tax under Section 115BCA is 10% of the income declared and distributed as dividends by the domestic company.
Q4. Is the tax under Section 115BCA applicable in addition to the normal income tax payable by the company?
Yes, the tax under Section 115BCA is applicable in addition to the normal income tax payable by the company.
Q5. How is the tax under Section 115BCA computed?
The tax under Section 115BCA is computed on the gross amount of dividend declared and distributed during the previous year.
Q6. When is the tax under Section 115BCA payable?
The tax under Section 115BCA is payable within 14 days from the date of declaration and distribution of dividends.
Q7. Are there any exemptions under Section 115BCA?
Domestic companies that are exempted from the payment of income tax under any provision of the Income Tax Act are also exempted from the payment of additional income tax under Section 115BCA.
Q8. What happens if a company fails to pay tax under Section 115BCA?
If a company fails to pay tax under Section 115BCA, it may be liable to penalties and legal action as per the provisions of the Income Tax Act.
Q9. Can a company claim a deduction for the tax paid under Section 115BCA?
No, a company cannot claim a deduction for the tax paid under Section 115BCA. It is a separate tax liability and cannot be treated as a deductible expense.
Q10. Are there any provisions for appeal or revision under Section 115BCA?
Yes, a company can file an appeal or revision against the order of assessment or penalty under Section 115BCA as per the provisions of the Income Tax Act.
