Industry & Economy
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Taxation
Assocham for removal of double taxation on dividend distribution
Our Bureau
New Delhi
,
Dec. 3
THE Associated Chambers of Commerce and Industry of India (Assocham) has urged the Government to remove double taxation on dividend distribution in its forthcoming Budget proposals for 2005-06.
In a statement, the Assocham President, Mr Mahendra K. Sanghi, said that the Section 115 (O) of the Finance Act 2004, empowers the Government to levy dividend distribution tax, which amounts to double taxation of the same income and penalises the corporate sector.
The Assocham chief further said, "The aforesaid Section needs to be scrapped as dividend is nothing but distribution of profit of the companies. Only after paying income-tax, the profit is distributed among shareholders. Dividend distribution tax thus amounts to double taxation and hence companies should not be penalised by having to pay dividend distribution tax."
Stressing on the issue of corporate demergers, Assocham has also suggested that clauses as incorporated in the Finance Act 2004, which require transfer of all corporate liabilities should be deleted since there are various liabilities which are not easily transferable separately or where lenders want the corporate liabilities to be retained with the demerged company.
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