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

Alternatives to China's Belt and Road Initiative

Alternatives to china's belt and road initiative China's BRI is not sustainable project as it doesn't uphold the principles of international standards such as sovereignty, transperancy and multilateralism. So the like minded countries have come up with the following alternatives: The Indo-Pacific Strategy : Initiated by United States, the Indo-Pacific Strategy aims to enhance infrastructure development, connectivity, and economic cooperation among countries in the Indo-Pacific region. It emphasizes principles such as transparency, rule of law, and respect for sovereignty. Japan's Partnership for Quality Infrastructure (PQI) : Japan's PQI aimed at promoting high-quality infrastructure projects that comply with  principles such as transparency, economic efficiency, and debt sustainability. Build Back Better World (B3W)  : This initiative is undertaken by the G7 countries. It was launched in 2021, it would provide an alternative to China's Belt and Road Initiative ...
Post a Comment
Read more

India's Historic and Cultural Ties Vs China's Economic Power.

  India's Historic and Cultural Ties Vs China's Economic Power. How China's economic power is winning over India's historic and cultural relations in its neighbourhood. In today's Geopolitical world relations are changing as fast as technology. Very recently we have observed that china is advancing in India's neighbourhood very rapidly, especially in Indian Ocean. Here we are going to analyse how and why China advancing in India's neighbourhood. There are two important aspects of this. One is India's historic and cultural ties with the neighbours and second is China's economic advantage over India.  India always talk about its strong historic and cultural relations with the neighbours. But, is this enough or is it always a positive point? In today's world where economy rules the world, historic and cultural ties has less significance. See, India's relations with Nepal are said like 'Roti- Beti relations'. If this is so then,why Nepal ...
Post a Comment
Read more

The Real Geopolitics Behind China's Belt And Road Initiative

What is the Real Geopolitics Behind China's belt and road initiative ? China's Belt and Road Initiative (BRI) remains an important point in recent geopolitics. The initiative was launched in 2013. It's announced aims are to enhance connectivity and infrastructure development across Asia, Africa, and Europe, through trade routes, infrastructure projects, and economic partnerships. But here we will analyse the real nature of the initiative. Let's first understand what is the meaning of Belt and Road in BRI: Belt is short for the "Silk Road Economic Belt", referring to the proposed overland routes for road and rail transportation through landlocked Central Asia along the historical trade routes. whereas "road" is short for the "21st Century Maritime Silk Road", referring to the maritime trade route as Indo-Pacific sea routes through Southeast Asia to Indian Ocean to reach middle East and Africa. Now, let's understand the hidden motive of C...
Post a Comment
Read more