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Buybacks & dividends: Tax experts discuss pros & cons under new tax regime

Updated : October 15, 2020 02:46 PM IST

In an interview CNBC-TV18, two tax experts Dinesh Kanabar, CEO of Dhruva Advisors and Sudhir Kapadia, National Tax Leader at EY weighed in on the pros and cons of buybacks and dividends under the new tax regime.

Kanabar said tax implication for dividends and buybacks are different based on the recipient.

He further said that individual resident Indian can have to pay tax of up to 43 percent on dividends whereas non-residents can enjoy a tax rate as low as 5 percent on dividends.

If individuals are getting dividends up to Rs 10 lakh, there is no tax, he added.

Smaller taxpayer would be much better off with dividend rather than buybacks, said Kanabar

According to Kapadia, any responsible company does not take decisions only based on tax considerations.

There are many profitable companies which are able to pay dividends, he added.

“I do not think dividend taxation should change once again,” said Kapadia.

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