New taxation rules to hit dividends received from foreign subsidiaries

Rewriting of norms may result in double taxation, say experts

The rewriting of dividend taxation rules may have an impact on dividends received from the foreign subsidiaries of domestic companies.

Easier rules of taxation applicable earlier have changed, potentially leading to double taxation on the amount received from foreign subsidiaries and distributed by their parent companies to shareholders, according to experts.

Dividends received by Indian companies from foreign subsidiaries have been subject to a concessional tax rate of 15 per cent, said Pranav Sayta, national leader, International Tax and Transaction Services, EY India.  When the parent firm further paid out dividends to its shareholders, dividend distribution tax only applied to