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Budget 2018: Govt may abolish dividend distribution tax, says EY India

Corporate income tax rate reduction does not seem likely in light of the fiscal constraints and subdued GST collection: EY India

Press Trust of India  |  New Delhi 

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The finance ministry may consider taxing dividend in the hands of shareholders and do away with the (DDT) in the to be unveiled on February 1, said on Monday.

In its pre-expectations, EY said DDT has become burdensome for corporates due to various factors such as high rate, litigation on disallowance and hence the return on capital employed has significantly diminished.

"There is a strong stock market momentum and the may not risk to slow down the same by introducing long term capital gains tax on equities market," Partner & National Leader, Business Tax Services, Garima Pande said.

In the 2015-16, Finance Minister Arun Jaitley had said that the basic rate of corporate tax in India at 30 per cent is higher than the rates prevalent in other major Asian economies, making domestic industry uncompetitive, and it would be brought down to 25 per cent over four years.

"Corporate income tax rate reduction does not seem likely in light of the fiscal constraints and subdued GST collection. However, may rationalise the effective corporate tax rate by abolishing and restoring the classical system of taxation of dividends in the hands of shareholders," Pande said.

First Published: Mon, January 15 2018. 21:50 IST
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