Union Budget 2018: Govt May Do Away With Dividend Distribution Tax

Like in the previous year's budget there was a strong call for re-introduction of long term capital gains tax on equity, this year too there are even heightened call for the same.

Read about Why and how it can be justified to bring back LTCG tax on equities.

As quoted in the PTI report, EY India, one of the big four accounting firms in India said that it is likely that in the Union Budget to be presented on February 2018 government does away with the dividend distribution tax and instead tax dividends in the hands of investors.

As part of the expectations drawn just before the budget, corporate are of the view that DDT is highly taxing owing to high rate, legal case in the event of disallowance which has significantly dropped down the value of return on capital employed.

Nonetheless in respect of LTCG on equities, EY India holds the view that "there is a strong stock market momentum and the government may not risk to slow down the same by introducing long term capital gains tax on equities market".

Also corporate tax which stands at the highest level of 30% when compared with other economies as was claimed to be brought down over the four year time frame by Jaitley is unlikely to be tweaked given the subdued GST collection levels and fiscal deficit which surpassed the government's targeted 3.2% of GDP 4 months before the end of fiscal year 2017-18.

With Inputs From PTI