Dividend Distribution Tax – DDT


Dividend Distribution Tax

What is Dividend?

Dividend is the portion of profit of a company that it decides to distribute to its shareholders. While dividend is tax-free for shareholder, the company pays tax on distributed dividend.

Dividend Distribution Tax

Dividend Distribution Tax is the tax levied on the amount distributed by company by way of dividend. It was introduced in Finance Act 1997 as Section 115-O under Chapter XII-D of Income Tax Act, 1961.

  • It is payable in addition to income tax.
  • Rate: 15% (plus surcharge and education cess on it)
  • The company shall be liable to pay the tax within fourteen days from date of declaration of dividend or distribution of dividend or payment of dividend (whichever is earlier)

Recent Proposal in Budget

The Budget had proposed a 10 per cent tax on the dividends for those promoters with annual dividend income of Rs 10 lakh or more.

The implication of this proposal is that companies where promoters share is on higher side will rush to declare the dividend before 1st April, 2016.

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