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Posted Wed, 24 Aug 2022 12:40:52 GMT by AARTI 80
Hello, I'm correcting an error in my self-assessment wrt Dividends received in India & need help. I have posted the same thread in the personal tax forum too, awaiting reply. Until 2020, the income tax laws in India provided for an exemption of the dividend income received from Indian companies by the investors by levying a tax called the Dividend Distribution Tax (DDT) on the company paying the dividend. I quote from some Indian tax websites: " Any domestic company declaring/distributing dividend is required to pay DDT at the rate of 15% on the gross amount of dividend as mandated under Section 115O. Therefore the effective rate of DDT is 17.65% on the amount of dividend." This DDT works out 20.56% including surcharge & cess. However as it was charged at the company level, i did not get any div vouchers stating the tax paid & these were exempt from my Indian income tax returns. Based on the DTA between India & UK a dividend tax credit of max 15% is available. Can i claim this tax credit i.e. 15% eventhough i dont have any documentation / div voucher, when filing my UK tax? My accountant is not too sure, as i have no documentation to prove this..hence the question here. Is this DDT by Indian companies something that's understood by HMRC by default? Thank You
Posted Thu, 25 Aug 2022 14:28:08 GMT by HMRC Admin 28
Hi,

Dividend Distribution Tax is levied on domestic companies that distribute dividends or profits earned to their investors and shareholders in a particular year.

However, the income obtained as a dividend from domestic companies is exempted from taxation as per the Income Tax Act of India.

Thank you.
Posted Thu, 25 Aug 2022 14:59:16 GMT by AARTI 80
Hi, the question was regarding my tax liability in the UK not India. are you saying I don't need to pay any tax on these dividends in UK?
Posted Tue, 30 Aug 2022 16:47:12 GMT by HMRC Admin 18
Hi,

Foreign dividends are taxable in the UK and are declared on supplementary form SA106.  Where there is a double taxation agreement with the UK, you can claim tax relief on the foreign tax paid.

Thank you.

 

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