Preference Dividend – TDS Applicability

• January 7, 2020
• CA Chandan Agarwal's Office

The issue that arises is to determine whether Preference dividend falls under the definition of dividend u/s 2(22). DDT u/s 115-O shall be deducted only when the dividend distributed falls u/s 2(22). In case preference dividend is not covered u/s 2(22), TDS u/s 194 is required to be deducted.

1. Attention is to be given to sec 115BBDA. An extract of the said section provides that

“Notwithstanding anything contained in this Act, where the total income of a specified assessee, resident in India, includes any income in aggregate exceeding ten lakh rupees, by way of dividends declared, distributed or paid by a domestic company or companies, the income-tax payable shall be the aggregate of—

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