Skip to main content

Budget bonanza: Dividend distribution tax may go

By
Budget bonanza: Dividend distribution tax may go
The finance ministry is likely to do away with the dividend distribution tax (DDT) in the upcoming Union Budget.Sources in the know have said there have been considerable discussions on the topic among various stakeholders.
At present, if a company gives dividend to its shareholders, it has to pay DDT of 20.36 per cent (15 percent plus surcharge and cess).Two stakeholders, who met Finance Minister Arun Jaitley and Finance Secretary Hasmukh Adhia separately for preBudget consultations, told Business Standard that the issue of DDT came up in the meetings that took place between industry representatives and Adhia.
This move, experts say, would help the government in more ways than one —it would boost India Inc´s ease of doing business, encourage firms to give more dividends, and improve returns for retail investors in the lower income tax bracket
“It is expected that Budget 2018 may propose a withdrawal of DDT and return to the classic system of dividend taxation, that is, dividend income to be taxed at the hands of the recipient shareholders,” said Sonu Iyer, partner and leader, India region people advisory services, EY.
According to Iyer, the case of removal of DDT is the need to make effective corporate tax rate in India compare favourably with competing economies.
It also enables foreign investors to get credit of tax in their countries, thereby improving return of investment and ease of doing business in India.“It also substantially reduces litigation under Section 14A, which disallows expenditure in relation to exempt income,” Iyer said.
DDT was introduced in the Finance Act 1997.Though the dividend income is tax free in the hands of investors, since there is a tax incidence before dividend payout, it reduces the returns for taxpayers in the lower tax brackets of 10 per cent and 20 per cent, respectively.
Also, individuals, Hindu Undivided Families, and partnership firms earning more than Rs 1 million in dividend income have to pay an additional tax of 10 per cent plus surcharge and cess. With this move, the government can achieve the objective of lowering taxation for corporate houses and also improving returns for people in the lower income tax bracket slab, as the dividend would be added to their income and taxed, according to the tax slab.
The Business Standard, New Delhi, 12th January 2018

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more