Budget 2020: Govt Likely To Tweak Dividend Distribution Tax Applicability

In the upcoming Union Budget, the Finance Ministry is likely to announce changes to dividend distribution tax (DDT) and long-term capital gains (LTCG) tax on equity investments.

According to CNBC-TV18 sources, the government is likely to change the applicability of DDT. Currently, DDT is paid by the company that issues the dividend to investors of its equity shares. The report suggests that considerations are being made to make the person who receives the dividend pay the DDT instead of the issuer. The idea is to include dividend as part of the income earned by the taxpayer.

Further, multiple reports say that the government is likely to increase the timeline on LTCG on equities from 12 months to 24 months. A likely exception on LTCG on equities held for over 2 years may be announced to improve long-term participation in the financial markets.

There could also be a reduction in taxes on capital gains made from the sale of house property to increase demand in the distressed real estate market.