Bye Bye Dividend Distribution Tax
Published: Feb 01, 2020
By TIOLCORPLAWS News Service
NEW DELHI, FEB 01, 2020: AS per section 115O of the Income Tax Act, 1961, the Indian Companies who has declared, distributed or paid any amount as dividend is required to pay a dividend distribution tax @ 15% on the gross amount of dividend. Now, in a move to increase the cash flow of the India Inc., the Government has decided to forego Rs 25,000 crore and eliminated the dividend Distribution tax. The move will lead into a situation where the dividend income will now be taxed only in the hands of the investors as per the tax rate applicable to their income.
Ms Sitharaman, in her Budget speech, has added that the government proposes to remove the cascading effect by allowing the deduction for the dividend received by a holding company from its subsidiary. The DDT started in 1997 with the initial rate of 7.5% which the saw a gradual increase over the period of time. Now, two decades later, the BJP led government has decided to abolish it.
