Budget 2020 Expectations: Good news coming soon? Government may remove Dividend Distribution Tax
The government may remove the Dividend Distribution Tax (DDT) to give a big relief to the companies. According to sources, the DDT may be replaced with Dividend Withholding Tax in this Budget 2020
The government may remove the Dividend Distribution Tax (DDT) to give a big relief to the companies. According to sources, the government may replace the DDT with Dividend Withholding Tax in this Budget 2020.
The companies cut 20% tax as TDS while giving dividends to the shareholders. The tax on the dividend distribution is currently at 20%. If the amount of dividend that a shareholder receives from a company, exceeds Rs 10 lakhs, then he is required to pay 10% as tax.
But, the proposal which is being brought for the Budget 2020, will mandate only the shareholder to pay tax and not the company. The tax required to be paid by the shareholder will be according to his income tax slab and if there is a refund as per the income of an individual, he is likely to get that too.
It has been a longstanding demand of the companies to remove the DDT as it has been subjecting to a double hit to the companies. The companies have been arguing that they have been paying taxes on the incomes that they were making and then on the dividends that they pay to the shareholders.
Moreover, if the dividend amount exceeds Rs 10 lakh limit, the shareholders are also required to give tax. The companies have made representation to the Finance Ministry several times in the past.
Even the top echelons in the finance ministry have agreed to do away with this tax as this is considered as a regressive tax. Countries like South Africa and Germany have Dividend Withholding Tax. In India, the DDT was brought in 1997.
See Zee Business Live TV Streaming below
Removal of DDT will increase profits of the companies as the burden for the tax will go to the shareholders. The companies will just collect it as TDS and deposit it with the government which will not result in lower tax collections for the government.
Well-known tax expert, TP Ostwal says that removing the DDT will be a very positive step. It will also be good for small investors and good for the companies too, he said.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
05:54 PM IST