Section 194:
Dividends.
The principal officer of an Indian company or a company which has made the
prescribed arrangements for the declaration and payment of dividends (including dividends on preference
shares) within India, shall, before making any payment in cash or before issuing any cheque or warrant in
respect of any dividend or before making any distribution or payment to a shareholder, 1
who is resident
in India, of any dividend within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or
sub-clause (d) or sub-clause (e) of clause (22) of section 2, deduct from the amount of such dividend,
income-tax 2
*** at the rates in force:
3
Provided that no such deduction shall be made in the case of a shareholder, being an individual, if—
(a) the dividend is paid by the company by an account payee cheque; and
(b) the amount of such dividend or, as the case may be, the aggregate of the amounts of such
dividend distributed or paid or likely to be distributed or paid during the financial year by the
company to the shareholder, does not exceed 4
two thousand five hundred rupees:
Provided further that the provisions of this section shall not apply to such income credited or paid
to—
(a) the Life Insurance Corporation of India established under the Life Insurance Corporation
Act, 1956 (31 of 1956), in respect of any shares owned by it or in which it has full beneficial
interest;
(b) the General Insurance Corporation of India (hereafter in this proviso referred to as the
Corporation) or to any of the four companies (hereafter in this proviso referred to as such
company), formed by virtue of the schemes framed under sub-section (1) of section 16 of the
General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), in respect of any shares
owned by the Corporation or such company or in which the Corporation or such company has full
beneficial interest;
(c) any other insurer in respect of any shares owned by it or in which it has full beneficial
interest:
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Provided also that no such deduction shall be made in respect of any dividends referred to
in section 115-O.
Notes:
1. Ins. by Act 49 of 1991, s. 51 (w.e.f. 1-10-1991).
2. The words “and super-tax” omitted by Act 10 of 1965 (w.e.f. 1-4-1965).
3. Subs. by Act 20 of 2002, s. 73, for the first and second provisos (w.e.f. 1-6-2002).
4.Subs. by Act 32 of 2003, s. 73, for “one thousand rupees” (w.e.f. 1-8-2002).
5. Ins. by s. 73, ibid. (w.e.f. 1-4-2003).