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Divided Distribution Tax

09 April 2020

Company pays tax on its profit, but whereas when company distributes its profit to it's Share holders, its again taxed as DDT.

Isn't this double taxation??

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6 Replies

Vinay Govi (25 Points)
Replied 09 April 2020

No it is not double taxation. The income distributed to shareholders is out of the profits earned by the company. In this the profit is not earned directly by shareholders. They are only investing their money.

Mandakulathur Ananthanarayanan (186 Points)
Replied 09 April 2020

DDT is a tax on dividends the incidence of which is shifted to companies from shareholders. Now, w.e.f April 1, 2020, DDT is abolished and dividends are taxed in the hands of shareholders

Ganesan Sakthivel (12 Points)
Replied 09 April 2020

@ Vinay

you can't say that shareholders just invest. Ambani holds shares of Reliance, whereas he doesn't hold as investments.

See, when partenership firm Distributes profit, why doesn't this same concept of DDT apply???