Impact of Removal of Dividend Distribution Tax by Finance Act, 2020

• April 14, 2020
• CA Chandan Agarwal's Office

Removal of DDT (Dividend Distribution Tax) by Finance Act, 2020 (FA 2020) and its impact on other provisions of Income Tax Act, 1961

Existing Provisions (before amendment):

Section 115-O provides that, in addition to the income-tax chargeable in respect of the total income of a domestic company, any amount declared, distributed or paid by way of dividends shall be chargeable to additional income tax at the rate of 15 percent. The tax paid on such dividend is treated as the final tax (called as DDT). However, the dividend tax @30% is leviable on deemed dividend under section 2(22)(e).

Now, section 10(34) provides that any income by way of dividends, referred to under section 115-O, is excluded from the total income of the shareholder.

Read more on: https://taxguru.in/income-tax/impact-removal-dividend-distribution-tax-finance-act-2020.html