**
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)

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