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    Budget 2020: govt abolishes Dividend Distribution Tax

    Feb 01, 2020 20:36 IST

    In a move that will offer some relief to India Inc., Finance Minister Nirmala Sitharaman has proposed the shifting of Dividend Distribution Tax (DDT) to individuals instead of companies in Budget 2020. Dividend income will now be taxed only in the hands of investors as per the tax rate applicable to their income. "To make Indian equity markets more competitive, companies will no more pay dividend distribution tax (DDT); it will be taxed in the hands of the recipient," she said. So far, companies were required to pay DDT at 15%, though including surcharge and cess put the effective rate at 20.56%. The withdrawal of the DDT will remove the cascading impact of taxation, and will eventually result in high investments in profit-making companies.