Exclude pooling vehicles like Mutual funds, AIP’s from section 115BBDA- Dividend Taxation– Budget 2017-18 Suggestion

By | March 2, 2017
(Last Updated On: March 2, 2017)

Suggestions on Clause 44 of Finance Bill / Budget 2017- Section 115BBDA – Scope of section 115BBDA, initially restricted to individuals, HUFs and Firms, expanded –Certain pooling vehicles like Mutual funds, AIFs etc. to be exempted

The Finance Act, 2016 had inserted new Section 115BBDA to tax dividend income in excess of Rs. 10 lacs in case of an Individual, HUF and Firm at the rate of 10%.

The Finance Bill, 2017 proposes to extend the scope of section 115BBDA of the Act to include all categories of persons within its purview except a domestic company, a fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in section 10(23C)(iv) or section 10(23C)(v) or section 10(23C)(vi) or section 10(23C)(via), a trust or institution registered under section 12AA.

The amendment as proposed in section 115BBDA of the Act only excludes certain specified persons from its purview. Therefore, by implication, all other persons are covered within the purview of Section 115BBDA of the Act. [ Read Taxation of dividend Income w.e.f FY 2017-18 ]

The amendment particularly impacts some of the pooling vehicles such as Mutual funds and Alternative Investment Funds (AIFs) which represent multiple investors, to whom the income earned has to be distributed.

Pursuant to the amendment proposed, dividend in excess of Rs. 10 lakhs would become taxable in the hands of the aforesaid pooling vehicles even though the share of dividend income of each investor in such pooling vehicles may not exceed Rs. 10 lakhs.

Suggestion:

To remove such hardship, it is requested that a suitable amendment may be brought in to exclude pooling vehicles like Mutual funds, AIP’s, etc. from the purview of section 115BBDA.

Source- ICAI Post-Budget Memoranda-2017

Budget 2017-18 Suggestion- Turnover Limit needs to be increased for TDS section 194A/ 194H/ 194I & 194J

Transfer of unquoted shares – double taxation for seller and buyer -Budget 2017-18 Suggestion

Capital Gain – joint development agreement -Budget 2017-18 Suggestions

Gift u/s 56(2)(x) not treated as Income u/s 2(24)? Budget 2017-18 Suggestions

Transfer of carbon credits not treated as Income u/s 2(24)? Budget 2017-18 Suggestions

Clear confusion of TCS on Sale of Jewellery w.e.f 01.04.2017 – Budget 2017-18 Suggestions

Related Post on Budget 2017-18

Budget Speech 2017-18 -Download /Print

Finance Bill 2017 -Download /Print -Budget 2017-18

Memorandum Explaining Provisions in Finance Bill 2017

Updates  on Union Budget 2017-18

Books on Budget 2017-18

Taxmann’s Budget 2017-18 -Book

Budget 2017-18- Notifications on Central Excise , Customs and Service tax – New Book

Ajit Prakashan’s Union Budget 2017-18 -New Book

BDP’s Customs Law Manual (2017-18 Budget Editon with CD) -New Book

 

Leave a Reply

Your email address will not be published.