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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
Updated
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India: Underlying Tax

 (1) Documents needed to support the underlying tax claim

The accounts showing the profits out of which the dividend was paid and the first page of the Income Tax Return, which show the tax assessed will be required by the Underlying Tax Group. If the Tax Return is not available, the company’s tax computation which shows the calculation of income tax payable should be sent instead.

 

(2) Dividend distribution tax

Relevant Profits are reduced by the dividend tax provision shown in the company’s profit & loss account.

The dividend distribution tax is admissible as an underlying tax,which attaches to the dividend:

 

Dividend R’s     100,000,000  
         
Underlying tax 50,000,000      
         

 

10,000,000    
  Dividend Distribution tax  60,000,000
160,000,000        
        37.207%

 

 (3) Reserves

 

Relevant profits are reduced by transfers to:

Debenture Redemption Reserve

Development Allowance Reserve

Export Incentive Reserve

Investment Allowance Reserve

Investment Allowance (Utilised) Reserve

Tourism Reserve

 

 (4) Spared taxes

A copy of the certificate granting tax spared status and the relevant page(s) of the company’s tax computation showing the spared taxes should be sent to the Underlying Tax Group.