Simplifying tax on capital

A clear timeline needed for transition to a transparent regime

The government is reportedly considering abolishing the dividend distribution tax (DDT) and making dividend income taxable in the hands of shareholders. The move is expected to boost investor sentiment as it will reduce multiplicity of taxes for companies. DDT is currently levied at a rate of 20.55 per cent, including surcharge and education cess, on dividends paid by companies to shareholders. The government has reasons for reconsidering the DDT. Finance Minister Nirmala Sitharaman had termed the tax a “regressive measure” in the last session of Parliament because it leads to cascading of taxes. It affects foreign investors who are unable