(a) whether the Government has reviewed / is reviewing the scheme for revising the definition
of income-tax;
(b) whether the Government is contemplating to levy tax on the dividend of the companies;
(c) if so, the reasons therefor;
(d) whether the interest on post office deposit schemes and on mutual funds is being exempted
from Income Tax; and
(e) if so, the details thereof?
MINISTER OF STATE IN THE MINISTRY OF FINANCE: (SHRI S.S. PALANIMAN1CKAM)
(a) There is no definition of `income-tax` under the Income tax Act, 1961 (`Act`). However, clause
(43) of section 2 of the Act defines `tax` in relation to the assessment year commencing on the Is`
day of April, 1965 and any subsequent assessment year to mean income-tax chargeable under the
provisions of the Income tax Act, 1961, and in relation to any other assessment year, income-tax
and super-tax chargeable under the provisions of the Act prior to the aforesaid date. This definition
was reviewed and Finance Act, 2005 amended the said definition w.e.f. 1.4.2006 to include fringe
benefit tax payable under section 115WA of the Act in respect of the assessment year commencing on
1.4.2006 and any subsequent assessment year.
(b) & (c) Under the existing section 115-O of the Income Tax Act, 1961, tax is already levied
at the rate of fifteen per cent, on the amount of dividends declared, distributed or paid by a
domestic company on or after 1st April, 2003. Vide Finance Bill, 2008, it has been proposed that
in the case of a domestic company, the amount of such dividend will be reduced by the amount of
dividend received by the domestic company from its subsidiary, subject to the fulfillment of
certain specified conditions. Dividend distributed by a domestic company which is subject to
Dividend Distribution Tax under section 115-O of the Act is exempt in the hands of the recipient
under section 10(34) of the said Act. Levy of tax on dividend in the hands of the recipient is not
under consideration.
(d) & (e) Income by way of interest, premium on redemption or other payment on such securities,
bonds, annuity certificates, savings certificates and other certificates and deposits, including
those of Post Office, as the Central Government may, by notification in the Official Gazette,
specify in this behalf, is exempt under section 10(15)
(i) of the Act, subject to the conditions
and limits specified in such notification.Under section 10(35) of the Act, exemption is available
in respect of any income (other than income arising from the transfer of units) received in respect
of the units of
(i) a Mutual Fund registered under the Securities and Exchange Board of India Act,
1992, or regulations made thereunder; or
(ii) such other Mutual Fund set up by a public sector bank
or a public financial institution or authorised by the Reserve Bank of India and subject to such
conditions as the Central Government may, by notification in the Official Gazette, specify in this
behalf.