Deduction of tax at source under section 194 of the Income-tax Act, 1961-Deduction from dividend income-Rate of tax applicable during the financial year 1987-88-Levy of surcharge on income-tax-Regarding - Income Tax - 509/1988

Deduction of tax at source under section 194 of the Income-tax Act, 1961-Deduction from dividend income-Rate of tax applicable during the financial year 1987-88-Levy of surcharge on income-tax-Regarding Circular No. 509 Dated 23/2/1988 To All Chambers of Commerce, etc. Sir, Subject: Deduction of tax at source under section 194 of the Income-tax Act, 1961-Deduction from dividend income-Rate of tax applicable during the financial year 1987-88-Levy of surcharge on income-tax-Regarding. I am directed to say that according to the provisions of section 194 of the Income-tax Act, 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 any sub-clause under section 2(22) of the Income-tax Act, deduct income-tax at source during the financial year 1987-88 at the rate of 25% as laid down in the Finance Act, 1987. However, no such deduction shall be made in the case of a resident individual shareholder of a company in which the public are substantially interested if the dividend is paid by an account payee cheque and the aggregate of the amounts of such dividends distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder does not exceed Rs. 2,500. 2. It is brought to your notice that, vide section 3 of the Finance (Amendment) Act, 1987 (No. 46 of 1987), the First Schedule to the Finance Act, 1987, has been amended with immediate effect. According to this amendment, the amount of income-tax computed on the basis of the aforesaid rates laid down in the Finance Act, 1987, shall be increased by a surcharge for the purpose of the Union calculated at the rate of 5% of such income-tax. The levy of surcharge has come into force with effect from 16-12-1987. 3. The contents of this circular may be brought to the notice of all concerned. If any assistance is required in this regard, the concerned Income-tax Officer or the Local Public Relations Officer of the Income-tax Department may be approached for the purpose. Yours faithfully, (Sd.) B.E. Alexander, Under Secretary, Central Board of Direct Taxes.