Write a short note on Corporate Dividend Tax.

Corporate Dividend Tax (CDT) is payable in addition to the income tax payable by the company. It is applicable to a domestic company only.

The following points are important regarding CDT :

  1. It is payable on any amount declared, distributed or paid by the company as dividend (interim or otherwise).
  2. The dividend may be paid out of current profit or accumulated profit.
  3. It is to be paid even if no income tax is payable by the company.
  4. No credit shall be claimed by the company or by any person in respect of tax so paid.

CDT will be shown in the profit and loss account below the. line along with dividend proposed/paid. The liability for CDT will be recognized in the same accounting year in which the dividend has been recognized. In the balance sheet CDT will be shown as a liability under the heading Current liabilities and Provisions, sub head Provisions.

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