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Should dividends be taxed in investors hands?

Created by : Esha Johar, Risk Analyst, Irevna  | 01 28 2010 10:15:41 +0000
Industry : Equity Research/AnalyticsFunctional Area : India(Markets)
Keywords : investors profit small investors dividends taxing dividend distribution tax ddt
Activity:  189 views;  last activity : 07 06 2010 20:18:09 +0000

The debate on whether to tax dividends in the hands of the shareholder or the company is a very old debate, but in the present times the scenario changes a bit. As there is double taxation of the same income that is happening, where both corporates and investors are taxed due to the distribution of dividends, So, what do you think people, should dividends be taxed in investors hands? share your views on this?

  
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I think yes dividends should be taxed in investors hands. Dividends which are nothing but a distribution of profits of the company that have already suffered corporate taxes. They believe that the same profit should not be taxed twice, once in the hands of the corporate and again in the form of DDT, when it gets distributed to shareholders.

Here the revenue department believes a company has a distinct identity from its shareholders. The company pays corporate taxes on its income. Once it is paid to the shareholder as dividend, it is the income of the shareholder and it enters a different passage. And I personally think that dividend should be taxed in the hands of the shareholder. The present system of taxing dividend in the hands of the company is unfair to small shareholders.
By Esha Johar, Risk Analyst, Irevna  01 28 2010 10:15:41 +0000
 
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Dividends passive income for small shareholders, my opinion is best to go with one tier tax system (only tax at corporate, not at individual level). This may leads to small dividend payout, not to speculate.
By Govindu Ravikumar, a  01 28 2010 12:32:58 +0000
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yes, dividend should counted in taxable income. because IT department is the back bone of the india. and whenever ever any investor got dividend he/she should pay dividend because it is their income and with that income they invest some ware else  and from their also they make profit.

other reason that in India many people are not give tax if we apply this rule than sure some percentage of tax payer obeviously increase and result is India income increase automatically
By ROHIT ARORA, EXECUTIVE-FINAICIAL REPORTING & CONTROLLING  | 01 29 2010 10:49:52 +0000
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Hi whats your skill please clear


By Niraj Kumar Gupta, Assistant Professor, Ornate Ispat Ltd.  | 01 29 2010 08:34:55 +0000
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Yes it should be taxed. You are right when you say it amounts to double taxation. But there are several other things also which are double taxed. Moreover it is investors' income in his hand so logically it should be taxed. What can be done to correct this double taxation is to refund his tax if his income does not qualify for taxation.


By Aditya Sharma, Insurance Advisor/Analyst, LIC OF INDIA, ICICI LOMBARD  | 01 28 2010 11:14:09 +0000
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When we talk about the Income tax on dividents, income should be taxed in hands of the assessee once, double taxation is not a qualitative taxation. Suppose if we leave apart the taxation of dividends atsource then there are chances of tax evation in the hands of the assessee, government may loose revenue. So better option is suffer tax or deduct tax at the of payment of divident so that it will be ftax free in the hands of the investor.
By RAMANATHA PRABHU N, Chartered Accountant  | 01 29 2010 12:51:25 +0000
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Dividend income is not taxable in the hands of the investors. Because the tax on it is paid by the company who is declaring the dividend @ 16.995%
By ABHISHEK JHAGARAWAT, Manager-Finance, Mercedes-Benz India Private Limited  | 01 29 2010 09:05:37 +0000
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This should not be "taxed" at-all either in the hands of Co or the investors.

In case of PSUs, the Govt. is an 'investor', when Govt. gets dividend from their own undertakings /cororations, they might require to pay dividend taxes - not an anomoly ? These make things complicated. Best : no such tax.
By ASOKE KUSARI, Domestic Private Banking-Executive/Manager, A large leading PSU Bank - India  | 01 28 2010 15:51:09 +0000
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