Consideration for switching to dividend tax collection: a lawyer charged by investors rather than by a company

New delhi date. November 13, Wednesday

The Indian government is considering switching to its Dividend Distribution Tax (DDT) system in an effort to increase spending by companies and increase foreign funding flows, the source said.

The proposed budget in February could come as a proposal to announce the tax on dividends from shareholders. Currently dividend tax is paid by companies.

The change is coming as part of the government's efforts to accelerate the country's economic growth rate, sources in the finance ministry said. The country's economic growth rate fell to a five-year low in the June quarter. The central government has recently announced some steps to encourage companies to increase their spending, including reduction in corporate taxation, money laundering at banks, withdrawal from foreign investors.

Due to the impact of dividend taxation, companies invest in debt instruments that do not have the necessary equity that they can afford, an analyst said. The recommendation was included in several recommendations made by the government-constituted committee. Indian companies have to pay 5 percent tax on the declared dividend, which increases with the surcharge to 20 percent.

Due to the dividend distribution tax, the government generates revenue of Rs 5 billion per year. And even if the system is changed, the revenue of the government will not be affected, the analyst added.

The share of gross fixed capital formation is also seen in the GDP of countries where companies are not investing. It is worth mentioning here that there were earlier reports that the government was planning to abolish LTCG tax and DDT and STT. However, the report was later rejected by the government.