Budget 2012: Highlights - Dividend Distribution Tax

(Sec. 115 0) Dividend distributed by a Domestic Company is exempt from income-tax in the hands of all shareholders and the Company is liable to pay DDT @ 15 percent on such dividends. As per the current provisions of the Income-tax Act, for computation of DDT, the amount of dividend declared by the Domestic Company will be reduced by the amount of dividend, if any, received by it during the financial year if -

• such dividend is received from its subsidiary
• the subsidiary has paid DDT on such dividend; and
• the Domestic Company is not a subsidiary of any other Company

With effect from 1 July 2012 the above conditions will be substituted by the following:

• the dividend is received from its subsidiary;