Dividend distribution tax

Practtically speaking! this is not followed.

Their exist smart brain before declaring. If the company has Rs. 100 distributable surplus then people behind the company would say that Rs. 84 is to be decclared as dividend only. Shareholders are ask to approve the dividend rate based on 84 Rs only. We also know that shareholders do not have a right to declare a rate beyond the proposed rate. Once the comapny gets approval of rate based on 84 they would remit the amounts into share holders bank accounts and balance of Rs. 16 is remitted to government in the form of DDT.

Had their not been DDT, the shareholders would get complete Rs. 100 distibutable surplus. But the smart brains do not want the company to pay so they propose the rate which is based on Rs. 84.

(Assuming that 16 is DDT as DDT rate is 16.33 change)

Distributable surplus - 100

DDT rate                 -  16%

DDT                        - 16.

Net amount              - 84.