Quick Summary
Removing dividend distribution tax (DDT) and moving to classical system of taxing dividend in the hands of shareholders/unit holders. Section 115-O provides that, in addition to the income-tax chargeable in respect of the total income of a domestic company, any amount declared, distributed or paid by way of dividends shall be charged to additional income-tax at the rate of 15 per cent. The tax so paid by the company (called DDT) is treated as the final payment of tax in respect of the amount dec
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FAQ :
The Dividend Distribution Tax (DDT) paid by companies is being removed. Instead, dividends will now be taxed in the hands of the shareholders or unit holders.
Most of the amendments, including the taxation of dividends in the hands of shareholders, take effect from April 1, 2020. Some other amendments related to assessment year 2021-22 also apply.
Shareholders and unit holders will now be responsible for paying income tax on dividends they receive, at their applicable tax rates.
Yes, a deduction for expenses will be allowed, but it will be capped at a maximum of 20% of the dividend or income from units.
Dividends declared, distributed, or paid on or before March 31, 2020, will still be covered under the previous provisions, meaning DDT would have applied.
Yes, TDS will be applicable on dividend income. For residents, the rate is proposed to be 10%, with a threshold limit of Rs 5,000 for dividends paid other than in cash.
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