For Financial Year 2015-16 (AY 2016-17)

This is because Company paying this dividend has to pay tax to the government

Particulars Amt
DDT Rate 15
Surcharge @ 10% 1.5
Total 16.5
Education Cess @ 3% 0.495
Effective Rate of DDT 16.995

Suppose Company wants to pay Dividend to Shareholders of Rs 100000

   
Dividend Amt 100000
DDT @ 16.995% 16995
Net Amt Paid 83005

Effective Rate of Dividend on Net Amt Paid=16995/83005= 20.47%

For Financial Year 2016-17 (AY 2017-18)

They are normally exempt in hands of shareholder
However,if Dividend amount is more than 10 lacs, they are taxable in hands of shareholder also
Company has to pay usual Dividend Distribution tax 

Suppose Company wants to pay Dividend to Shareholders of Rs 100000

   
Dividend Amt 100000
DDT @ 16.995% 16995
Net Amt Paid 83005

Effective Rate of Dividend on Net Amt Paid=16995/83005= 20.47%

Also Shareholder has to pay 10% tax on 100000 (and not 83005)

 

  1. Practical Income Tax
  2. Important Points of Different Incomes

About the Author

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .