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The government is likely to abolish dividend distribution tax (DDT) in the upcoming Budget and may instead tax the shareholders receiving dividends, in a bid to help improve investor sentiment by addressing the multiplicity of taxes and bring down the effective tax rates for companies. The move will need changes in Section 115 (O) of the Income-tax Act.
DDT is levied on dividends that a company pays its shareholders out of its profits. It is currently charged at the rate of 20.55 per cent, including a surcharge and education cess. “The idea is to move to the classical way of
