Dividend distribution tax is the tax levied by the Indian Government on companies according to the dividend paid to a company's investors.
At present the dividend distribution tax is 15%, according to the Union Budget 2007, India.
As per existing tax provisions, income from dividends is tax free in the hands of the investor. Further the dividends from domestic companies are tax-exempt, dividend from foreign companies are taxable in hands of investor. However, this is not to say that there is no tax levied at all. On the contrary, there is a levy of 15% of the dividend declared as distribution tax. This tax is paid out of the profits/reserves of the company declaring the dividend. Additional surcharge of 5% on DDT and education cess of 3% is levied.
Famous quotes containing the words distribution and/or tax:
“The man who pretends that the distribution of income in this country reflects the distribution of ability or character is an ignoramus. The man who says that it could by any possible political device be made to do so is an unpractical visionary. But the man who says that it ought to do so is something worse than an ignoramous and more disastrous than a visionary: he is, in the profoundest Scriptural sense of the word, a fool.”
—George Bernard Shaw (1856–1950)
“People buy their necessities in shops and have to pay dearly for them because they have to assist in paying for what is also on sale there but only rarely finds purchasers: the luxury and amusement goods. So it is that luxury continually imposes a tax on the simple people who have to do without it.”
—Friedrich Nietzsche (1844–1900)