Deemed Dividend tax

This discussion clarifies the tax treatment of deemed dividends under Indian tax law. It explains that while deemed dividends under sections 2(22)(a), (b), (c), and (d) are generally taxable in the hands of shareholders (subject to a limit) and attract Dividend Distribution Tax (DDT) for the company, deemed dividends under section 2(22)(e) are exempt for shareholders but the company still pays DDT. Importantly, from April 1, 2020, all dividends, including deemed ones, are taxable in the shareholders' hands, with rates dependent on their individual taxability.