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Dividend brings Rs 1,500 cr

K.R. Srivats
Hema Ramakrishnan

NEW DELHI, Feb. 28

THE decision of the Government to shift the incidence of taxation of dividends from the companies distributing such dividends to the recipient shareholders will translate into extra revenues of about Rs 1,500 crore for the exchequer.

The gainer, besides the Government, will also be companies that receive large amounts of dividends arising out of inter-corporate investments. This benefit arises out of the re-introduction of Section 80M that was done away with a few years ago. Hitherto, the dividends declared and distributed suffered a flat tax rate of 10 per cent. Tax experts pointed out that such dividends would now attract tax rates ranging between 10 and 30 per cent depending upon the slab under which the shareholder was liable to be taxed.

Such a system, it is perceived, would be advantageous to the Government as it can mobilise more revenue from shareholders.

The dividends distributed by mutual funds will also now be taxed at the hands of the recipient unit holders.

Simultaneously, the Government has also triggered the tax deduction at source system in respect of dividends paid by companies to shareholders and unit holders.

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