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    WHEN WINDS OF CHANGE BLOW,ALMOST ALL PEOPLE BUILD WALLS; THE INNOVATIVE FEW BUILD WINDMILLS!

    on
    October 29, 2019

    1.PM MODI , THROUGH HIS DYNAMIC, CHANGE-ALIGNED INNOVATION, PROVES, YET AGAIN, THAT HE IS A LIVING EXAMPLE FOR THOSE WHO CHOOSE AND DARE TO INNOVATE TO WRIGGLE OUT OF HARD TIMES!

    2.INDIA INC CAN EXPECT STILL MORE TAX INCENTIVES TO WAKE UP FROM THEIR LONG SLUMBER, STOP PASSING THE BUCK TO THE GOVT AND SHAPE UP THROUGH ACCELERATED INVESTMENT IN GROWTH!

    3. The PMO is expected to remove a tax on companies introduced in 2003 through Section 115O,of the Income Tax Act,1961,by way of making the companies pay “DIVIDEND DISTRIBUTION TAX”[DDT] .

    3.1. But will the dividend be now taxable in the hands of the receiver? May be.

    4. BUYBACK TRICK EMPLOYED BY COMPANIES TO AVOID PAYING THE DDT

    4.1. To avoid payment of DDT, both listed and unlisted companies used to buy-back its own shares from the
    shareholders.

    4.1.1. Only the shareholders had to pay Capital Gains Tax computed as per the provisions of the Income Tax Act, 1961

    4.2. The UPA Govt tried to plug this HALF HEATEDLY by introducing Section 115QA in 2013 to tax the UNLISTED COMPANIES ALONE at 20% of the amount paid by these companies to the shareholders who sold their shares back to the unlisted companies.
    4.3. However, Listed Companies [ listed in the stock exchanges] continued to be exempt from this tax on the amount paid to buy-back their shares.

    4.3.1. These were taxed as capital gains in the hands of the persons who sold their shares back to the company.

    4.4. To end this preferential treatment given to the listed companies, the Govt decided to tax the listed companies also on buy-back of shares from July 2019

    4.5. This was hugely resented by India Inc

    5. Now the PMO is expected to abolish both the DDT and the tax on buy-back of shares of both the listed and unlisted companies WITH A VIEW TO PUT MORE MONEY IN THE HANDS OF THE COMPANIES FOR INVESTING IN ECONOMIC GROWTH.

    6. A review of existing slabs and holding period of long term capital gains (LTCG), short term capital gains (STCG) is also on the cards

    7. Another measure expected is the abolition of the Securities Transactions Tax [STT]

    7.1.The STT is charged on buy and sale of securities instruments, including equity. The markets have been demanding reduction of the STT or doing away with it altogether. However, it is a big money spinner for the government, and it also helps to track equity buying at source and was introduced in 2004 after abolishing capital gains.

    Ramdas Iyer
    29.10.2019
    Independent Analyst

     

    Reference Link : https://economictimes.indiatimes.com/wealth/personal-finance-news/bonanza-for-stock-markets-as-dividend-distribution-tax-to-be-scrapped/articleshow/71803901.cms?utm_source=ETnotifications&utm_medium=editpush&utm_campaign=Personal+Finance+News&utm_content=bigimage

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