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Discuss important provisions regarding divisible profit?
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Discuss important provisions regarding divisible profit?
Important Provisions Regarding Divisible Profit
- Definition: Divisible profit refers to the portion of profit earned by a company that is available for distribution to its shareholders.
- Calculation: Divisible profit is calculated by deducting all expenses, including taxes, interest, and depreciation, from the total revenue earned by the company.
- Legal Requirements: The Companies Act, 2013, mandates that companies must set aside a certain portion of their profits, known as the dividend reserve, before distributing dividends to shareholders.
- Shareholders: Divisible profit is distributed among shareholders in proportion to their shareholding in the company.
- Retained Earnings: Companies may choose to retain a portion of their profits instead of distributing them as dividends. This retained earnings can be used to finance future growth and expansion plans.
- Dividend Policy: Companies must have a clearly defined dividend policy that outlines how they will distribute profits to shareholders and under what circumstances they may choose to retain earnings.
- Taxation: Dividends received by shareholders are subject to taxation under the Income Tax Act, 1961. The rate of taxation varies depending on the shareholder's income level and the amount of dividend received.
- Legal Compliance: Companies must comply with all legal requirements related to the distribution of divisible profit, including the Companies Act, 2013, and the Income Tax Act, 1961.
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Discuss important provisions regarding divisible profit?
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Discuss important provisions regarding divisible profit? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Discuss important provisions regarding divisible profit? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Discuss important provisions regarding divisible profit?.
Discuss important provisions regarding divisible profit? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Discuss important provisions regarding divisible profit? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Discuss important provisions regarding divisible profit?.
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