Page 61 - DHC Budget Book 2021-22 Final

from the Book Profit, if such income is credited to Statement of Profit and Loss and taxed at a rate lower than MAT rate due to DTAA. Further, the expenses related to such income are required to be added back in the computation of Book Profit as per clause (fb) of Explanation 1 to Sec. 115JB. Dividend income was not specified in above clause since it was exempt u/s 10(34) of the Act.
— Since dividend income is taxable in the hand of shareholders w.e.f. 01-04-2020, clause (iid) and (fb) of Explanation 1 to Sec. 115JB are proposed to be amended to provide similar treatment for dividend income earned by Foreign Company. Hence, such dividend income shall be reduced and related expenses shall be added back while computing Book Profit, if such dividend income
is credited to statement of Profit and Loss and taxed at a rate lower than MAT rate due to DTAA.
Comment
— Hitherto, Explanation 4 to Sec. 115JB (inserted vide Finance Act, 2016 w.r.e.f. 01-04-2001) provides exemption from applicability of Sec. 115JB to a Foreign Co., if it does not have
a Permanent Establishment in India or not required to seek registration under Company law in India. Present exclusion contained in Sec. 115JB relating to capital gains, interest, FTS etc. for the companies referred above has become redundant post introduction of Explanation
4. Thus, similar amendment now proposed
for dividend income also does not have any additional implications for such companies.
Content
Economic Survey 2020-21 Basic 59