ForumIAS LATEST
- SFG FRC 2027 | Program starts from 19th Dec. 2026 | Admissions open for Entrance Test Click Here to know more →
- Prelims Test Series (PTS) for Prelims 2027 starts 11th Oct. 2026 Click Here to know more →
- [Pre-order] Ethics Redbook 3rd Edition: Delivery starts from 10th October onwards Click Here to Read More →
- 21 Sept. | GS Advance Program (GSAP) for UPSC 2027 Mains starts from 11th Oct. Click Here to Read More →
News:Union Budget has proposed to abolish the dividend distribution tax(DDT) at the company’s level.The dividend income will now be added to the taxable income of the recipient and taxed at the applicable rate.
Facts:
About Dividend Distribution Tax(DDT):
- A dividend is a return given by a company to its shareholders out of the profits earned by the company in a particular year.They are usually given in proportion to the number of shares owned.
- Dividend distribution tax(DDT) is the tax imposed by the Indian Government on indian companies according to the dividend paid to a company’s investors.
Is Dividend Distribution Tax fair?
- Currently, companies are required to pay DDT on the dividend paid to its shareholders at the rate of 15% plus applicable surcharge and cess in addition to the tax payable by the company on its profits.
- It has been argued that the system of levying DDT results in an increase in tax burden for investors and especially those who are liable to pay tax less than the rate of DDT, if the dividend income is included in their income.
- Further, non-availability of credit of DDT to most of the foreign investors in their home country results in reduction of rate of return on equity capital for them.
