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According to the new Budget proposal, the dividend income will now be taxable in the hands of the recipient.
Indian companies with high promoter holding may announce high interim dividends in March before the new budget proposal comes into effect, reported Economic Times.
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According to the proposal announced in the Budget on Saturday, the dividend income will now be taxable in the hands of the recipient.
Most promoter-owners hold equity individually or in trusts, and are in the upper tax bracket. So, they will now have to pay 43 percent tax on dividends from April 1, the newspaper report added.
Presently, shareholders need not pay any tax on income from dividends from domestic companies for receipts up to Rs 10 lakh. Beyond Rs 10 lakh dividend income, the shareholders are taxed at 10 percent.
After the abolition of dividend distribution tax (DDT), investors will have to pay according to their respective tax slabs.