Individual tax - ddt dividend tax @ 28.33%

Tax queries 473 views 2 replies

Pandu

MBA

25 Points Joined August 2015

Per new Govt act, from Oc 1, 2014, DDT needs to paid @ 28.33%. More details here. Pls check under non-equity funds (equity fund dividends are tax exempt). Pls look at two tables in Pg# 1 & Pg# 3.

Two questions.

(1) My Mutual Fund company did not do TDS for DDT. It does not show up in Form 26 AS. Which means I need to pay DDT while doing the filing. Question: Where do I declare it? It is taxed @ 28.33% (not 30.33% which is for Short term capital gain tax). For me, the savings are close to Rs.2k.

(2) Second question: This law is effective Oct 1, 2014. For FY 2014-15, does that mean there are two tax regimes for DDT. One at 22.33% (previous tax rate, till Sep 30, 2014) and another at 28.33 (existing tax rate, effective Oct 1, 2014)? If yes, again, how do I declare it..

If (2) is not answered it's ok. Requesting answer for (1) atleast. Thanks.

Replies (2)

Rajagopalakrishnan R

PARTNER

1434 Points Joined May 2010

On query 1. - DDT is paid by the Mutual Fund and not the investor. If you are referring to the rate of 28.33 on Non Equity funds,this amount is to be paid by the MF. The change that has happenned is explained in the next page of the Doc referrd by you. In simple terms teh amendment in Oct 2014 made the dividend tax payable/paid by the MF also a part of the devidend declared. For Eq DDT rate is 20%, and Dividend paid is Rs. 100, Tax would be as follows.

Dividend 100 = 1-DDT rate i.e 80%

Therefore gross dividend is 100/.8 = 125

DDT would be 20% of 125 i.e 25

Earlier this was only Rs. 20/- Therefore the additional 5% is a burden on the unit holders since NAV would reduce correspondingly.

HOWEVER, non of these affect the way you have been showing your Units income. If MF has distributed dividend then it is the duty of the MF to pay the tax and not you. Your income will be exempt if dividend is subject to DDT.

Pandu

MBA

25 Points Joined August 2015

Thanks Mr.Rajagopalakrishnan for the clarification.

Usually the DDT tax shows up in 26 AS on my name / PAN in Income tax website. Previous years, when MF pays , it used to show up in 26 AS. This year , I do have non-equity dividends - however, it does not show up.

Hence this post & request.