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)
“In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.”
—Alexis de Tocqueville (1805–1859)