Dividend Distribution Tax shifted to individuals instead of companies, says FM.
➢ It is a tax levied on dividends that a company pays to its shareholders out of its profits.
➢ The Dividend Distribution Tax, or DDT, is taxable at source, and is deducted at the time of the
company distributing dividends.
➢ The dividend is the part of profits that the company shares with its shareholders.
➢ The law provides for the Dividend Distribution Tax to be levied at the hands of the company, and
not at the hands of the receiving shareholder.
➢ However, an additional tax is imposed on the shareholder, who receives over Rs. 10 lakh in
dividend income in a financial year.
Dividend Distribution Tax to private companies:
➢ Under Section 115-O, the Income Tax Act, any domestic firm which is declaring or distributing
dividend has to pay DDT at the rate of 15 per cent on the gross amount of dividend.
➢ Market participants, especially brokers, have been calling for long to scrap the DDT. The tax makes
markets unattractive as it leads to significant taxation of corporate earnings, they argue.
➢ Other than Dividend Distribution Tax (DDT), the Securities Transaction Tax (STT) and Long-Term
Capital Gains (LTCG) tax are other major taxes levied on market instruments.