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Sunday, 10 March 2013

Define the term of Dividend in the income tax ordinance








DIVIDEND :-
The profit which is distributed among the shareholders or modarba certificate holders after paying the tax is called dividend.

Payment Included In Dividend :-
Following payments made by the company to its shareholders are treated as dividend.

  1. Payment Out Of Profit :-
Any payment made by a company out of accumulated profits to the shareholders.

  1. Current Year Profit :-
Distribution of cash out of current year profit to the shareholders.

  1. Payment Of Liquidation :-
The profits which are paid on the liquidation of a company to the shareholders and modarba certificate holders are also included in the dividend.

  1. Capital Reduction :-
Distribution of profit on the reduction of capital to the extent to which the company possessed the accumulated profit.

  1. Premium On Shares :-
Distribution of cash made by the company out of share premium to the shareholders is also included in dividend.

  1. Bonus Shares :-
If profit is distributed among the shareholders in the shape of bonus shares these are also included in dividend.

  1. Debentures :-
If profit is distributed among the shareholders and modarba certificate holders in the shape of debentures, these are also included in dividends.

  1. Deposit Certificate :-
Profit distributed among the shareholders in the way of deposit certificates is also included in dividend.


Not Included In Dividends :-
Following amounts are not included in the dividend :
  • Loan : A loan which is advanced by the company to the shareholders.
  • Full consideration : Distribution at the time of liquidation or reduction of capital in respect of any share for full consideration is not included in the dividend.

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