The Finance Ministry has virtually ruled out any rethink on the Budget proposal to tax dividends above ₹10 lakh a year at the hands of the recipient.
This is even as several suggestions came at a post-Budget meeting organised by the Confederation of Indian Industry (CII) to tweak this proposal or even drop it.
“We are not looking to bring any change to this proposal,” Shaktikanta Das, Economic Affairs Secretary, told BusinessLine on the sidelines of this meeting, when asked whether the government would rethink this proposal in the wake of India Inc’s suggestions.
Industry view
Sunil Kant Munjal, former CII President, had at the meeting suggested that government should look to collect the tax on dividends in excess of ₹10 lakh as ‘tax deduction at source’ by the company declaring the dividend, rather than tax it at hands of recipient.
Earlier, in his address, Das said this proposal will ensure enhanced collection of taxes while maintaining the principle of equity.
He said the dividend distribution tax (DDT) uniformly applies to all investors, irrespective of income slabs. This is perceived to distort the fairness and progressive nature of taxes. People with relatively higher income can bear a higher tax cost.
A CII member even maintained that this proposal is tantamount to triple taxation and needs to be dropped.
Rahul Bajaj, Chairman of Bajaj Auto and past CII President, later told BusinessLine that he was in support of the proposal on dividends. “I am one of the largest recipients of dividends in the country. I am okay with it,” he said.
