Business Standard

Budget 2022-23: FPIs bat for equal taxation on dividends and buybacks

Experts say current situation can lead to double taxation

budget, fiscal deficit, economy, disinvestment, privatisation

Illustration: Ajay Mohanty

Ashley Coutinho
This year’s Union Budget must consider bringing a parity in tax treatment of dividends and buybacks, said market players.

The Budget in 2020 did away with the dividend distribution tax (DDT) in the hands of the company and instead decreed that tax be deducted at source (TDS) at 10 per cent on dividend income paid by a company to shareholders if the amount exceeded Rs 5,000 a year. This made dividends taxable in the hands of investors.

Indian companies, however, are still subject to 20 per cent tax (plus surcharge and cess) on share buybacks. In 2013, tax on buybacks was introduced

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First Published: Jan 29 2022 | 6:05 AM IST

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