Dividends ‑ Declaration of ‑ Transfer to reserves of certain percentage of profits

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..... Query: Rule 2 prescribes that amounts should be transferred to reserves depending on the amount of dividends to be declared. The amount to be transferred is expressed as a percentage of current profits. Neither the Act nor the Rules define current profits . Having regard to the word current used, it would appear that past losses are not to be deducted as required for the computation of net pr .....

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..... s profits. The profits available for distribution as dividends can only be the profits after tax and not before tax. The expression current profits used in rules 2 and 3 of the Transfer of Profits to Reserves Rules accordingly refers to profits after tax. Further, items like development rebate reserve written back, or adjustments relating to previous years will also have to be taken into accou .....

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