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Jan 29, 2026
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Dividend given to non-residents can't be taxed at rates higher than DTAA, rules Bombay High Court; Know what it means for NRIs
On November 28, 2025, the Bombay High Court ruled that dividends paid by an Indian subsidiary of a foreign company to its non-resident shareholders fall under Article 11 of the India-UK DTAA. This means the tax department can't impose taxes on those dividends beyonds the rates set by the treaty. However, keep in mind that this ruling pertains to the dividend distribution tax (DDT) period, which has since been abolished.
Summary of the judgement
Chartered Accountant Suresh Surana, said to ET Wealth Online that in the case of M/s Colorcon Asia I'vt. Ltd. vs JCIT/PCIT/DCIT Tax Appeal No. 5 OF 2024, the appellant, M/s Colorcon Asia Pvt. Ltd., an Indian company and a wholly-owned subsidiary of Colorcon Limited, United Kingdom, was involved in manufacturing and supplying of pharmaceutical excipients.
According to Surana, during the financial years 2015-16 to 2018-19, the appellant declared and paid substantial dividends to its UK parent company and paid Dividend Distribution Tax (DDT) under Section 115-O of the Income-tax Act, 1961 (hereinafter referred to as 'the IT Act'"), at the domestic rates.
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