Question

A company pays a dividend of 15% on its ten-rupee shares from which it deducts income tax at the rate of 22%. Find the annual income of a man who owns one thousand shares of this company.

Answer 1

Nominal value of 1 share = Rs. 10

Nominal value of 1000 shares = 1000 × 10 = Rs. 10,000

∴ Dividend = 15% of Rs. 10,000

= `15/100 xx 10000`

= Rs. 1,500

∴ Income tax paid = 22% of Rs. 1,500

= `22/100 xx 1500`

= Rs. 330

His net income = Rs. 1,500 – Rs. 330 = Rs. 1,170