What are the provisions about transfer to Reserves?

Transfer to Reserves

As per the rules framed under the Companies Act, companies are required to transfer certain percentage of their profit after tax to reserves to declare dividend out of current year's profit which is arrived at after making necessary provision for depreciation as required by the Companies Act, 2013. The various rates of transfer based on the rate of dividend are as follows :

Rate of Dividend	Transfer to Reserves
Exceeds 10% but not 12.5% of the paid up capital.	2.5% of the current profit.
Exceeds 12.5% but not 15% of the paid up capital.	5% of the current profit.
Exceeds 15% but not 20% of the paid up capital.	7.5% of the current profit.
Exceeds 20%	10% of the current profit.