Shift of Taxability of Dividend from Corporate to Individual – Higher Tax
Taxes on Dividend Income has increased significantly through surge in personal income tax post the abolition of Dividend Tax Distribution (DDT) in 2020-21 and with the introduction of the dividend tax system. Under the then new system, companies will not pay DDT any longer and the onus of tax on dividend shifted to the hands of the recipients. As such the dividend amount will attract the respective individual’s personal income tax rates whose median tends to be much higher than the DDT improving the collection of tax. This growth has been significant if one looks at the last four years data.
