Taxation Of Dividend in India

What is Dividend?

Dividend in simple terms means the distribution of profits earned by a company to its shareholders. It may be distributed in the form of cash payments, stocks, debentures, etc. but the most common among all is cash payments.

One of the most talked amendments of Finance Act, 2020, was removal of dividend distribution tax. Honorable Finance Minister Shri Nirmala Sitharaman stated in her budget speech-
“Currently, companies are required to pay Dividend Distribution Tax (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 increase in tax burden for investors especially those who are liable to pay tax less than the rate of DDT if the dividend income is included in their income. 

Prepared by:
CS RANJIT KEJRIWAL
FCS & REGISTERED VALUER (SFA)
FOR PRIVATE CIRCULATION ONLY