Dividend Distribution Tax (DDT) in India

Prof. (Dr.) Vishwajeet V. Jituri


The shareholders invest for getting return on their investments; these could be in the form of dividends and/or capital gains from a capital market. Looking into this aspect, the Companies also try to maintain a balance between dividend and capital appreciation in their profit-sharing policy. The classical method of charging tax on dividend income in India was through the recipient of the dividend. Post 1997, the Government changed this method by applying dividend distribution tax (DDT) on the Companies distributing the dividend and the dividend income became tax exempt in the hands of the recipients. There were some issues faced by Corporates, non-resident shareholders and low-income bracket people. Thereafter, in Budget 2020, the Government has abolished DDT. This paper describes some of the aspects related with dividend distribution tax.

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ISSN : 2251-1571