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Know About the Financial Impact of Abolishing DDT

Why was DDT abolished? How does it affect finance and business? Find out here?

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DDT budget
Earlier effective Dividend Distribution Tax (DDT)was 16.995 per cent on the dividend declared. Lifetime Stock

BY ASHOK SHAH

Earlier effective Dividend Distribution Tax (DDT)was 16.995 per cent on the dividend declared. The tax was then grossed up in Budget 2014 and the current effective DDT rate was 20.56 per cent on the dividend declared. Further resident (non-corporate) shareholders were liable for an additional tax at 10 per cent (plus applicable surcharge and cess) on dividend exceeding Rs 10 lakh. The effective tax rate for Individuals falling in highest tax slabs was 14.248 per cent.

In the Budget 2020, DDT in the hands of the company has been abolished and has been simultaneously substituted with a tax in the hands of the shareholders at applicable tax rate. Additional tax of 10 per cent also has been done away with. The companies declaring such dividend will have to now deduct tax at source (TDS) at 10 per cent on the amount distributed as dividend.

DDT budget
In the Budget 2020, DDT in the hands of the company has been abolished and has been simultaneously substituted with a tax in the hands of the shareholders at applicable tax rate. Wikimedia Commons

Small tax payers would definitely benefit as their effective rate of tax is much lower and would result in substantial saving. Impact on taxation of large retail investors may be negative, as dividend is expected to be taxable at the maximum slab rate in their hands. The effective tax rate for individuals falling in highest tax slabs is 42.74 per cent i.e. there will be an additional burden of 28.492 per cent.

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However, this will promote foreign investment since the foreign investors would now claim benefit under the double tax treaty where the tax rates ranges from 5 to 15 per cent and the same will be available as credit in their home countries. This will result in direct saving of 20.56 per cent for these entities. (IANS)

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Prime Minister Narendra Modi Direct Officials To Ensure Sufficient Availability of Medical Equipments Amidst Coronavirus Crisis

PM Modi also reviewed disease surveillance, testing and critical care training and also directed the concerned groups and officials to ensure sufficient production

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Narendra Modi
Prime Minister Modi on Saturday chaired a joint meeting of the empowered groups constituted for planning and ensuring implementation of COVID-19 response activities in the country. Wikimedia Commons

Prime Minister Narendra Modi has directed officials to ensure sufficient availability of all medical equipment such as ventilators, coveralls, masks, to be used in Covid-19 response.

Prime Minister Modi on Saturday chaired a joint meeting of the empowered groups constituted for planning and ensuring implementation of COVID-19 response activities in the country.

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In a series of tweets, Prime Minister’s Office wrote that Modi reviewed countrywide preparedness regarding availability of hospitals, proper isolation and quarantine facilities.

Coronavirus
Prime Minister Narendra Modi has directed officials to ensure sufficient availability of all medical equipment such as ventilators, coveralls, masks, to be used in Covid-19 response. Pixabay

PM Modi also reviewed disease surveillance, testing and critical care training and also directed the concerned groups and officials to ensure sufficient production, procurement and availability of all essential medical equipment such as PPEs, masks, gloves and ventilators.

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“PM @narendramodi reviewed countrywide preparedness regarding availability of hospitals, proper isolation and quarantine facilities as well as disease surveillance, testing and critical care training”, the PMO said in one of the tweets.

“PM @narendramodi also directed the concerned groups and officials to ensure sufficient production, procurement and availability of all essential medical equipment such as PPEs, masks, gloves and ventilators,” said another tweet. (IANS)