BUDGET 2014 - 15: Dividend Distribution Tax..

Dividend Distribution Tax (DDT)

(1) Dividends distributed by a Domestic Company are exempt from income-tax in the hands of all shareholders. The Domestic Company is liable to pay DDT at 16.995% (inclusive of surcharge & education cess) on such dividends.

(2) For computation of DDT with effect from 1 October 2014, the amount of dividend distributed to shareholders shall be increased to such amount as would after reduction of tax on such increased amount be equal to the net distributed profits.

(3) For computation of DDT, the amount of dividend declared by the Domestic Company will be reduced by the following amounts of dividend, if any, received by it during the financial year -

(4) Dividend received from domestic company if -

(A) The dividend is received from its subsidiary (i.e. in which it holds more than 50% of equity shares)

(B) The subsidiary has paid DDT payable under Section 115-O of the Act.

(5) Dividend received from foreign company if -

(A) The dividend is received from its subsidiary (i.e. in which it holds more than 50 per cent of equity shares)

(B) The tax on such dividend is payable by the domestic holding company under section 115BBD of the Act.

(6) Dividends paid to any person for and on behalf of a New Pension System Trust.

(7) Income received by unit holders from a Mutual Fund (MF) is exempt from income tax. The MF (other than an equity oriented MF) is liable to pay income distribution tax as follows:

(A) 28.325% (inclusive of applicable surcharge and education cess) on income distributed to any person being an individual or a Hindu Undivided Family (HUF) by a money market MF or a liquid fund

(B) 33.99% (inclusive of applicable surcharge and education cess) on income distributed to any other person by a money market MF or a liquid fund

(C) 28.325% (inclusive of applicable surcharge and education cess) on income distributed to any person being an individual or a HUF by a debt fund other than a money market mutual fund or a liquid fund

(D) 33.99% (inclusive of applicable surcharge and education cess) on income distributed to any other person by a debt fund other than a money market mutual fund or a liquid fund

(E) 5.665% (inclusive of applicable surcharge and education cess) on income distributed to non-resident or / foreign company by MF under an Infrastructure Debt scheme.

(F) Like DDT from 1 October 2014, the amount of income distributed to MF unit holders shall be increased to such amount as would after reduction of tax on such increased amount be equal to the net distributed income.

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