TAX ON DIVIDENDS 2013

TAX ON DIVIDENDS

A company pays dividend to its shareholders or investors for the amount of fund they have invested. These dividends are taxed at a flat rate of 15 percent, as per the Income tax act of India. A company withholds the tax, which arises from these dividends and pays it to the government on behalf of its recipient.

These dividends are also subject to Service tax that is deducted by the company before paying it to the investors. The funds that attract Service tax are as follows:

Equity bases scheme
Debt based scheme.

Irrespective of the type of dividend they are not treated as taxable income in the hands of:

Individual
Nonresident India
Hindu Undivided family

In Dividend Distribution Tax, the companies declare the dividend and the payment date for the same. These dividends are not treated as an income in the hands of the investors or shareholders who receive them.  As per the law, the investors can be any one of the following:

A local company
Any 3 tier government organization
Any public organization, which has an approval under section 30(3) of the Income tax act
Mining rehabilitation trusts defined under section 37A of the Act
Shareholders in registered business houses, which has capital investment of not more than 2, 00,000 INR

There is an exemption to the rule where a company has to pay taxes on behalf of the assessor.

Dividend is one of the direct taxes and government has notified the conditions when the recipient of shares is liable to pay taxes.

The act states that where the debentures or interest are issued to the public who have no substantial interest in the affairs of the company are termed as Deemed dividend, which falls under the different taxation rules.

A company needs to have surplus profit or accumulated profit in order to issue Deemed dividend to the shareholders as defined under section 2 (22) of the companies act. They are mainly in the form of debentures and are treated as a repayment of loan or debts. In this type of dividend, a company doesn’t have to withhold any amount and pay it to the government as tax.

A company has to declare the payment of dividend in the annual general meeting and a notice for the same has to be sent to all of its members. The copy of the minutes of the meeting should be signed and duly submitted to the Registrar of the Companies. The details of the rate of dividend along with the deemed dividend if any should be mentioned in the minutes of the meeting.

The Indian law states that companies are liable to pay dividend to its shareholders out of the accumulated profit of the company. In case of deemed dividend, a company is not required to pay the dividends to the shareholders on the basis of shares held by them.

These dividends are treated as Income in the hands of the recipient and are charged to tax. In case if there is any service tax that is charged on the dividend then it has to be paid by the investor and not the company issuing the dividend.

TAX ON DIVIDENDS

Wheaton, Illinois (PRWEB) November 01, 2013

YieldShares, the Wheaton, Illinois-based provider of ETFs, today announced the October distribution for the YieldShares High Income ETF (YYY). YYY provides exposure to 30 closed-end funds ranked highest overall by the International Securities Exchange (ISE) in three criteria: fund yield, discount to net asset value and liquidity.

The distribution was paid on October 31, 2013 to shareholders of record as of the close of business October 28, 2013. The information below summarizes the distribution schedule for YYY.

Ticker: YYY

ETF Name: YieldShares High Income ETF

Income Distribution Per Share: $ 0.200000

Important Dates:

Ex-Date: 10/24/13

Record Date: 10/28/13

Payable Date: 10/31/13

The YieldShares High Income ETF (YYY) plans to issue future distributions on a monthly basis. To view the most recent yield information and distribution calendar for YYY, please visit http://www.yieldshares.com/distributions.aspx.

About YieldShares LLC

YieldShares LLC is an ETF Sponsor founded by ETF veteran Christian Magoon. The firm is focused on income investing and seeks to expand access to unique income investment strategies through ETFs. YieldShares believes that thoughtful income investing begins with diversification across a variety of asset classes, investment strategies and investment vehicles. For more information, please visit http://www.yieldshares.com.

To receive a distribution, you must be a registered shareholder of the fund on the record date. Distributions are paid to shareholders on the payment date. There is no guarantee that capital gains distributions will not be made in the future. Your own trading will also generate tax consequences and transaction expenses. Past distributions are not indicative of future distributions. Please consult your tax professional or financial adviser for more information regarding your tax situation.

Carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by visiting http://www.yieldshares.com. Read the prospectus carefully before investing.

Investing involves risk, including the possible loss of principal. Because the Fund is a fund of funds, its investment performance largely depends on the investment performance of the Underlying Funds in which it invests. An investment in the Fund is subject to the risks associated with the Underlying Funds that comprise the Index, including risks related to investments in derivatives, REITs, foreign securities and municipal securities. The underlying holdings of the fund may be leveraged, which will expose the holdings to higher volatility and may accelerate the impact of any losses. Fixed-income securities’ prices generally fall as interest rates rise. High yield securities are subject to the increased risk of an issuer’s inability to meet principal and interest payment obligations. These securities may be subject to greater price volatility due to such factors as specific corporate developments, interest rate sensitivity, negative perceptions of the non-investment grade securities markets, real or perceived adverse economic conditions, and lower liquidity. Preferred stock is subject to many of the risks associated with debt securities, including interest rate risk. In addition, preferred stock may not pay a dividend, an issuer may suspend payment of dividends on preferred stock at any time, and in certain situations an issuer may call or redeem its preferred stock or convert it to common stock. International investments may also involve risk from unfavorable fluctuations in currency values, differences in generally accepted accounting principles, and from economic or political instability. There is no guarantee that the fund will meet its investment objective.

The Fund will pay indirectly a proportional share of the fees and expenses of the Underlying Funds in which it invests, including their investment advisory and administration fees, in addition to its own fees and expenses. In addition, at times certain segments of the market represented by constituent Underlying Funds may be out of favor and underperform other segments.

Exchange Traded Concepts, LLC serves as the investment advisor, and Index Management Solutions, LLC serves as a sub advisor to the fund. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.








Had to cash out capital gains fund, about 22k. My question is, how much should I set aside for taxes?

I live in TN, where there is no income tax, but they do tax dividends.
Wanting to know before it’s too late.
Thank you.
There is no income tax in TN.

Answer by Meghan
I would say AT LEAST 30% of it, so about $ 7K.

TAX ON DIVIDENDS

A company pays dividend to its shareholders or investors for the amount of fund they have invested. These dividends are taxed at a flat rate of 15 percent, as per the Income tax act of India. A company withholds the tax, which arises from these dividends and pays it to the government on behalf of its recipient.

These dividends are also subject to Service tax that is deducted by the company before paying it to the investors. The funds that attract Service tax are as follows:

Equity bases scheme
Debt based scheme.

Irrespective of the type of dividend they are not treated as taxable income in the hands of:

Individual
Nonresident India
Hindu Undivided family

In Dividend Distribution Tax, the companies declare the dividend and the payment date for the same. These dividends are not treated as an income in the hands of the investors or shareholders who receive them.  As per the law, the investors can be any one of the following:

A local company
Any 3 tier government organization
Any public organization, which has an approval under section 30(3) of the Income tax act
Mining rehabilitation trusts defined under section 37A of the Act
Shareholders in registered business houses, which has capital investment of not more than 2, 00,000 INR

There is an exemption to the rule where a company has to pay taxes on behalf of the assessor.

Dividend is one of the direct taxes and government has notified the conditions when the recipient of shares is liable to pay taxes.

The act states that where the debentures or interest are issued to the public who have no substantial interest in the affairs of the company are termed as Deemed dividend, which falls under the different taxation rules.

A company needs to have surplus profit or accumulated profit in order to issue Deemed dividend to the shareholders as defined under section 2 (22) of the companies act. They are mainly in the form of debentures and are treated as a repayment of loan or debts. In this type of dividend, a company doesn’t have to withhold any amount and pay it to the government as tax.

A company has to declare the payment of dividend in the annual general meeting and a notice for the same has to be sent to all of its members. The copy of the minutes of the meeting should be signed and duly submitted to the Registrar of the Companies. The details of the rate of dividend along with the deemed dividend if any should be mentioned in the minutes of the meeting.

The Indian law states that companies are liable to pay dividend to its shareholders out of the accumulated profit of the company. In case of deemed dividend, a company is not required to pay the dividends to the shareholders on the basis of shares held by them.

These dividends are treated as Income in the hands of the recipient and are charged to tax. In case if there is any service tax that is charged on the dividend then it has to be paid by the investor and not the company issuing the dividend.

Dividends are the type of payments which are made by any corporation to the members of the stakeholders. Besides, it is also the portion of the corporate profits which are paid out to all the stakeholders. When any corporation earns any surplus or profit, that the money can be put to two types of uses, which can either be distributed to the stakeholders or can be re invested in any business. There are also two ways to distribute the cash to the stakeholders: dividends and the share repurchases. There are a number of companies also retain the portion of earnings and also pay the balance as dividend.

For any joint stock company, the dividend is assigned as the fixed amount on every share. Thus, the shareholder gets the dividend in proportion to the shareholding. For any joint stock company, paying the dividends is not counted on as an expense, rather, this is the division of the after tax profits among all the shareholders.

The retained earnings are presented in the section of shareholder equity in the balance sheet of the company-similar as it issued the share capital. Commonly the public companies pay the dividends on the fixed schedule, but can declare the dividend at anytime, known sometime as a special dividend to differentiate it from fixed schedule dividends.

On the other hand, the cooperatives allocate the dividends according to the activity of the members, so often the dividends are counted on as the Pre-tax expense. Usually, the dividends are paid in the form of store credits, cash and shares in any company. Further, a number of public companies provide dividend reinvestment plans that automatically use cash dividend to buy the additional shares for all the shareholders.

What are the forms of the dividend payment?

Scrip or stock dividends: This kind of dividends are paid out in the way of the additional stock shares of issuing or another type of corporation like as the subsidiary corporation .
Cash dividends: This method is most common among all commonly through the printed paper check or electronic funds transfer. This kind of dividend is a type of the investment income and can also be taxable to the receiver in that year they are paid.
Property dividends: This kind of dividend payment method are those which are paid out in the type of assets from any issuing corporation or another type of corporation like subsidiary corporation. This kind of dividend is very rare.
Other kind of dividends: It can be used in the structured finance. The financial assets with the known value of the market can be divided as the dividends. In some cases, the warrants are distributed in this method.

TAX ON DIVIDENDS


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