Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: 4.8
Article rating: 5.0
Article rating: 3.0
Article rating: No rating
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: 4.5
Article rating: No rating
Article rating: No rating
Article rating: 4.2
Article rating: 5.0
Article rating: 4.0
Article rating: No rating
Article rating: No rating


Dividend distribution tax rate should be cut to 10%: CII

Author: IANS/Monday, January 15, 2018/Categories: Tax

Dividend distribution tax rate should be cut to 10%: CII

New Delhi - The dividend distribution tax rate should be cut to 10% in order to encourage participation of different stakeholders in the country's financial markets, industry body CII said.

In its recommendations to the government on the forthcoming Union Budget, the Confederation of Indian Industry (CII) has also said that, alternatively, to negate the multiple level taxation issues regarding dividend distributed, the company paying dividend should pay tax on its profits, including distributed profits, at corporate rates.

"Dividend should be taxed in the hands of the non-corporate (leveraged) shareholders as normal income, and expenses should be allowed against such dividend in full," a CII release said here.

The chamber has also recommended "that Section 80M which granted deduction of inter corporate dividend received by a domestic company to the extent of amount distributed by the recipient domestic company on or before the due date of filing return of income, should be reintroduced to preempt double taxation of inter corporate dividend.

"The second proposal is regarding Alternative Investment Funds."

"Conducive taxation framework is a vital cog in the wheels of the financial markets and has the potential to make or break the market," CII Director General Chandrajit Banerjee said in the statement.

On the with-holding tax (WHT) provisions for foreign portfolio investors (FPI), CII has suggested the reduced tax should be made perpetual, and not expire after June 2020, "to ensure tax certainty and higher participation from international investors".

Currently, WHT deduction at source on interest payments to FPIs stands at 5% on investments in rupee denominated domestic corporate bonds. It was reduced from 20% to 5% and has been made available till June 2020.

"FPIs interest in participation in Indian economy is increasing due to the sound economic growth of the country and the bare minimum incentive they want is tax certainty in the long term," the statement said. 

CII also recommended granting WHT exemption to FPIs to incentivise their participation in municipal bonds, saying this could help increase inflow of long term money from pension funds.

Print Rate this article:
No rating

Number of views (207)/Comments (0)

rajyashree guha


Other posts by IANS
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free