Direct tax code panel for DDT removal to promote investment According to sources, there are hardly any revenue loss by removing dividend distribution tax, since it will be offset by the taxes paid by shareholders. PTI|Sep 25, 2019, 07.46 PM IST

NEW DELHI: The task force on direct tax code (DTC) has recommended abolishing dividend distribution tax (DDT) with a view to promote investment.

The dividend distribution tax is a surrogate tax and it hinders foreign direct investment inflows, sources said.

Dividends paid by a domestic company are subject to dividend distribution tax at 15 per cent of the aggregate dividend declared, distributed or paid. The effective rate is 20.35 per cent, including a 12 per cent surcharge and a 3 per cent education cess.

According to sources, there are hardly any revenue loss by removing dividend distribution tax, since it will be offset by the taxes paid by shareholders.

The task force has also suggested providing relief to the middle class by slashing personal income tax rates.

However, sources said, the move to rationalise personal income tax will be taken by the government.

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