Chennai: The Income Tax Department has frozen some bank accounts of Cognizant Technology Solutions India Pvt Ltd (CTS) to recover Rs. 2500 Crore, which the Indian arms of NASDAQ listed Cognizant own as divident distribution tax (DDT) outstanding to the government.
That, as per the Income Tax Act, any distribution, capital reduction, DDT will have to be paid to the extent of the cumulative benefit defined as dividend. The sole exception is bought under Section 77A of the Companies Act and CTS did not cover Therefore, CTS had to pay DDT of up to Rs 2,500 crore in the financial year of 2016-17, but has not yet been paid, “a senior tax officer Said.
The shareholder is a Mauritius unit and an American company, which are 54% and 46% shares respectively. Cognizant did not deduct tax on the dispatch of the Mauritius Company, but the American company had deducted 10% tax on the dispatch. ”
A Cognizant spokesman said, “Cognizant’s business operations, work with our colleagues and clients is not affected, the High Court has directed the IT department not to take further action for further hearing. That the position taken by the I-T department is contrary to the law and without merits. Cognizant has paid all applicable taxes on this issue. Will continue to defend and pursue all available legal remedies. The department said that Cognizant purchased its shares in May 2016 from its shareholders in accordance with the agreement between them and company and
Income Tax Department freezes Cognizant’s bank accounts for non-payment
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