The Dividend Dilemma – Indian HNIs vs Non-Resident Investors

Under the current regime, dividends distributed by a company are subject to Dividend Distribution Tax (DDT) at an effective rate of 20.56 per cent. Such DDT is levied on the post-tax income of the company i.e. after the company has already suffered corporate tax on its profits. Since DDT is the tax obligation of the distributing company (i.e. it is not in the nature of tax deduction at source), such DDT is not available as a credit to the shareholder.