Recently, before the Delhi Bench of Income-tax Appellate Tribunal an additional ground was raised for applying Tax Treaty rate for Dividend Distribution Tax (DDT). While admitting this additional ground, the Delhi Tribunal has made preliminary observation that the additional tax levied under section 115-O of the IT Act (i.e. DDT) is a tax on income.

This is a significant development as the Tribunal will now delve upon whether the beneficial Tax Treaty rate can be applied for DDT or not. By applying the Treaty rate, the Indian Companies who have paid DDT under the IT Act will be entitled to claim the refund of excess DDT paid. This Ruling will also help those Indian subsidiaries of Multinationals to put forth their claim before the Appellate Authorities (even though not made before the lower authorities) for beneficial Tax Treaty rate.

We, at BDO in India, have summarized this ruling and provided our comments on the impact of this decision.

Our alert on this Ruling can be accessed at

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