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Double Taxation

Murali Krishna (Employee) (350 Points)

24 December 2008

Why Company has to pay Dividend Distribution Tax in cae of distributing dividends from the taxed income of caompany...??? It seems to be double Taxation..!!

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8 Replies

madhur gupta (student/article ) (1022 Points)
Replied 24 December 2008

only due to this dividend distribution tax dividend is exempt in hands of receiver.........

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Ameet (L) (1678 Points)
Replied 25 December 2008

I AGREE WITH THE MADHUR

Shudhanshu Agrawal (Business) (2570 Points)
Replied 26 December 2008

According to me Government is trying to apply all taxes at the place where income generates so that there willbe lesser possibility of hiding the income from taxes.....and there are lots of places where double taxation is coming...but then also tax has to be deducted.....am i ryt????

Murali Krishna (Employee) (350 Points)
Replied 26 December 2008

Madhur and Ameet pls refer quest once more..

Shudhanshu you tried well, but you are in next half of the answer, accordin to my question that government is collecting tax at double times as :

- Income Tax from Company and

- Dividend Distribution Tax from the Company on behalf of Share Holders. Wat is the need to government to collect once more as dividend distribution tax when it already collected from compan as Income Tax..??

Shudhanshu Agrawal (Business) (2570 Points)
Replied 26 December 2008

What i can say maybe coz government is getting tax two times that can be a reason and this will increase its revenues

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vipul (CA Final) (35 Points)
Replied 26 December 2008

i dont think its double taxation bcoz

bcoz when company pay dividend without any DDT then it will be taxable in the hands of Share holders so company is just paying our tax and remained amount to us as a tax free dividend

Murali Krishna (Employee) (350 Points)
Replied 26 December 2008

Vipul pls refer quest once more...

Sudhanshu what you said is 200% right, but on what basis the government can charge once more as DDT on Already taxed income..?? When they are not doing it in case Partner Ship, hope you’ll know that share income from partnership is exempted from tax.

What right does the government have..??

S.Anu (Student) (220 Points)
Replied 07 January 2010

wat sec 115-0(2) say na inaddition to the income tax , the company has to pay DDT Sec 4 says that subjec t to the provisions of this Act and hence tax levy on the total income Supreme Court case law Court clarify that it does not amount to double taxation at all.

and its not like that if the company paid DDT the dividend is exempted in the hands of shareholders bcoz it is levied on the company and not on shareholders ............