Preference Shares (Regulation of Dividends) Act, 1960
4A. Deduction of income-tax
Where the stipulated dividend in respect of a preference share of a company-
(a) is specified to be subject to income-tax and deduction is made there from on account of the income-tax payable by the company, or
(b) is being paid subject to a deduction there from on account of the income-tax payable by the company, notwithstanding the absence of any specification that the dividend would be subject to income-tax. such deduction made by the company from any dividend declared after the 28th day of February, 1966, shall in no case exceed twenty seven and a half per cent of the aggregate Of-
(i) the stipulated dividend, and
(ii) an amount equal to eleven per cent of the stipulated dividend as specified in sub-section (3) of section 3.