Although dividend distribution tax (DDT) remains the same, the Union budget 2016 has imposed a marginal tax on the super-rich investors on their income that they receive by way of dividends. If your overall dividend income exceeds Rs.10 lakh per annum, then you will now have to pay an additional 10% tax on your dividend income.
Experts say that investors in such cases will have to pay the 10% tax on their overall dividend income, and not just on the excess dividend income over the Rs.10 lakh limit.
“I am not too sad to see the dividend distribution tax being imposed even though it is a case of double taxation. However, that said, it appears that the money is being used well. The government is taxing the high income bracket and spending it on the poor”, said Leo Puri, managing director, UTI Asset Management Co. Ltd. What Puri means is that the dividends will be taxed by the companies before they distribute them to the investor, and then it will also be taxed in the hands of the investor.
