Reduction in tax rate on undistributed profit [Section 5A)
Through Finance Act 2017, section 5A was amended and a tax @ 7.5% was imposed on public companies if the said companies failed to distribute 40% of their after tax profits.
Through the Finance Act, 2018 the said rate of 7.5% has been reduced to 5% and limit of 40% has been reduced to 20%.
However, such distribution has to be made only through cash as the words “bonus shares” have also been omitted.
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