dividend distribution tax
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
14 October 2014
Dear Sir ,
I want Brief information about Dividend Distribution Tax / Corporate Dividend Tax.
Kindly explain......
I want Brief information about Dividend Distribution Tax / Corporate Dividend Tax.
Kindly explain......
21 October 2014
Section 115-O of the Act provides that a domestic company shall be liable for payment of additional tax at the rate of 15 per cent. on any amount declared, distributed or paid by way of dividends to its shareholders.
Prior to introduction of dividend distribution tax (DDT), the dividends were taxable in the hands of the shareholder. The gross amount of dividend representing the distributable surplus was taxable, and the tax on this amount was paid by the shareholder at the applicable rate which varied from 0 to 30%.
Post introduction of section 115O, the dividend was treated as exempt in the hands of such shareholders and the company declaring such dividend was required to pay Dividend Distribution tax (DDT) on the amount of dividends actually paid. The objective behind this transition was to simplify the tax collection mechanism on income distribution, as the number of companies paying such dividend was much less as compared to the number of shareholders receiving such dividend.
As per current rules, the DDT is 15% plus additional surcharge. The effective tax rate comes to around 16.995%.
In Budget 2014-15, the government has proposed to apply the DDT by grossing up the said amount. So, for instance if Rs. 85 was the dividend amount and 15% of it was DDT, new proposals would mean DDT is levied on Rs. 100 and thus the tax will go up by around 2.25%
The higher tax being paid by companies will essentially mean investors get lower dividend.
Prior to introduction of dividend distribution tax (DDT), the dividends were taxable in the hands of the shareholder. The gross amount of dividend representing the distributable surplus was taxable, and the tax on this amount was paid by the shareholder at the applicable rate which varied from 0 to 30%.
Post introduction of section 115O, the dividend was treated as exempt in the hands of such shareholders and the company declaring such dividend was required to pay Dividend Distribution tax (DDT) on the amount of dividends actually paid. The objective behind this transition was to simplify the tax collection mechanism on income distribution, as the number of companies paying such dividend was much less as compared to the number of shareholders receiving such dividend.
As per current rules, the DDT is 15% plus additional surcharge. The effective tax rate comes to around 16.995%.
In Budget 2014-15, the government has proposed to apply the DDT by grossing up the said amount. So, for instance if Rs. 85 was the dividend amount and 15% of it was DDT, new proposals would mean DDT is levied on Rs. 100 and thus the tax will go up by around 2.25%
The higher tax being paid by companies will essentially mean investors get lower dividend.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Opting our of sec 44AD
- Regarding TDS Applicability For Director Remuneration
- Regarding appeal to GSTAT
- Value of property in capital gain
- Form 121 & TDS deduction
- Multiple trade mark
- LC charges in relation to Asset purchased should be Capitalised ?
- SALE OF MOTOR CAR BY REGISTERED INDIVIDUAL
- Copyright software
- Transporter Declaration form
- GST Treatment of Insurance Commission for Existing GST Holder
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
