Skip to main content

What is Dividend Distribution Tax?

Who pay the Dividend Distribution Tax- Company or Indidual?





















In the financial year 2020-21, the Government made a major change in the dividend distribution tax.


The shareholders own the joint stock companies. These companies pay dividend to their shareholders. Dividend is a part of a company profits and it is paid on operating profits. The dividend paid by the companies to the shareholders attract a tax in India which is known as dividend distribution tax. The dividend distribution tax is a direct tax. Let's understand the concept of dividend distribution tax. So, the companies pay dividend to the shareholders on operating profits and before this dividend to get paid to the shareholders the dividend distribution tax was to be paid to the income tax department by these companies. The rate this tax was 15% (till march 2020)
Then, in the financial year 2020-21, the Government made a major change in the dividend distribution tax. According to which the companies don't need to pay this tax anymore. Now, the joint stock companies will transfer the dividend directly to the shareholders accounts without deducting the tax. So now the dividend earned by the shareholders will be part of their personal income and will attract personal income tax as per their tax slab after including this dividend. So now,  neither companies not the shareholders have to pay the 15% dividend distribution tax. At the place of dividend distribution tax which was paid by the companies (after deducting it from the shareholders dividend) now an individual shareholder will have to pay the income tax as per his/her tax slab after including this dividend.
It is good for the shareholders who fall in the lower tax slab than 15%. Earlier if a taxpayer is in the tax slab of 5% he also had to pay the 15% dividend distribution tax (DDT) as the dividend was paid to the shareholders after deducting 15% DDT by the stock companies. But, now the DDT is included in the personal income of an individual and then the tax is paid according to the his/her tax slab. 
Labels:

Comments

Post a Comment

Popular posts from this blog

How to save Indian social values system

India heading towards Socio-cultural changes, Need to save the core values of the Indian society. These values are the identities of our culture. In today's Indian society there are many changes taking place. Every society change in years. But, how can we say that a society is changing. What are the symptoms of this change. Every society has its value system which it preserve for years by passing it generation to generation. Then, what are the core values of Indian society ? The core values of Indian society are : respecting and obeying elders, cooperation, brotherhood, sharing of resources, careing and helping each other etc. One learns all these values in a joint family. A joint family is a big family where four -five nucleus families living together. A joint family is the custodian of the Indian social value system. In today's society, we are witnessing a noticeable decay of these values. Why so? This is because of fastly decrease in joint families. Today we rarely see a joi...
1 comment
Read more

Religion and Administration

The Equation between Religion and Administration. The positive secularism must lead to positive and healthy relationship between religion and the administration for the betterment of citizen's life. India is a very diverse country. This diversity is also true in case of religion. India has almost all religions of the world. Religion is a matter of individual faith. Every religion is a set of belief and faith. Every religion has its own God. Every religious person worship his/her God. All these persons think that this God is responsible for their pain, misery and happiness. So, They follow their respective religion' set of belief and faith. They think if they follow these norms, they will get happiness, otherwise they have to face pain and misery. So, They afraid of their God. Almost all the people in India follow atleast any one God. Around 90 percent of people in India are theist. Means 90 percent of people follow atleast any one religion's worship norms.  But, this percen...
Post a Comment
Read more

Important Takeaways from The Union Budget for The Financial Year 2024-25

Important Points from the Union Budget for The Financial Year 2025 The fiscal deficit is estimated at 4.9% of the GDP in FY 2025. The fiscal deficit is calculated as the government's total expenditure minus total receipts.  The 'Budget' word is not mentioned in the Indian constitution. It is mentioned as the "Annual Financial Statement" in article 112 of the constitution. Budget is prepared by the Budget Division of the Department of Economic Affairs in the ministry of finance. According to the article 266 of the Indian Constitution, Parliamentary approval is required to draw money from the Consolidated Fund of India. RK Shanmukham Chetty was the first finance minister of independent India. Morari Desai presented the budget ten times which is the maximum number of times by any finance minister in India till now.  Receipts estimates : The budget for FY 2025 estimates 31.3 lakh crore revenue receipts and 16.9 lakh crore capital receipts.  Expenditure estimates : T...
Post a Comment
Read more