How change in dividend tax impacts you
The Hindu Business Line|February 17, 2020
An analysis of how the new rules impact the outgo of investors who stay with the extant tax regime and those who shift to the new one
DHURAIVEL GUNASEKARAN ANAND KALYANARAMAN
How change in dividend tax impacts you

Budget 2020 has removed dividend distribution tax (DDT) and made dividends taxable in the hands of investors. Also, it has introduced tax deduction at source (TDS) at 10 percent if the dividend declared by mutual funds exceeds ₹5,000 in a year.

Presently, mutual funds deduct DDT first and then hand over the dividend to unit-holders.

From April 2020, the dividend amount will be added to the taxable income of the investor and taxed as per his/her tax bracket.

Currently, when mutual funds declare dividends, they pay tax at the rate of 10 percent and 25 percent on equity and non-equity schemes, respectively, and pay only the balance to investors.

In addition to the above tax rates, there is a surcharge (at 12 percent of tax) and cess (at 4 percent of tax plus surcharge). So, for retail investors, the effective DDT on equity funds works out to 11.65 percent, and on non-equity funds 29.12 percent.

There are two options in dividend plans — payout and reinvestment. In the dividend payout option, the dividend declared is paid out to investors. In dividend reinvestment, the dividend declared is not paid out but used to purchase additional units in the scheme.

Whether paid out or reinvested (also in liquid exchange-traded funds (ETFs)), dividends are subject to DDT presently but will be taxed in the hands of the investor from April 2020.

Given the changes in the taxation of dividends, who gains and who loses? Also, which plan —- dividend or growth — will be suitable for retail investors? We look at the options under both the old tax regime (with higher tax rates) and the optional new tax regime (with lower tax rates).

Old tax regime

Diese Geschichte stammt aus der February 17, 2020-Ausgabe von The Hindu Business Line.

Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.

Diese Geschichte stammt aus der February 17, 2020-Ausgabe von The Hindu Business Line.

Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.

WEITERE ARTIKEL AUS THE HINDU BUSINESS LINEAlle anzeigen
Covid Presents An Opportunity For India
The Hindu Business Line

Covid Presents An Opportunity For India

India must attract investors exiting China post-Covid. Streamlining of project clearances and relaxation in FRBM norms will help

time-read
4 Minuten  |
April 29, 2020
Did Alternative Assets Shield You From Covid-19 Volatility?
The Hindu Business Line

Did Alternative Assets Shield You From Covid-19 Volatility?

The assets closely linked to stock and debt markets could not stave off the losses

time-read
4 Minuten  |
April 29, 2020
How To Put Aircraft To Bed
The Hindu Business Line

How To Put Aircraft To Bed

Preserving grounded planes, to get them up and flying at short notice, is a challenging task. Ashwini Phadnis captures the process

time-read
5 Minuten  |
April 29, 2020
There Can Be No Going Back On WFH
The Hindu Business Line

There Can Be No Going Back On WFH

Covid-19 has fast-forwarded the shift to ‘work from home’. However, some face-to-face connect will always be needed

time-read
5 Minuten  |
April 29, 2020
UN, WHO Urged To Ensure ‘Benefit Sharing' Of Covid-Related Data
The Hindu Business Line

UN, WHO Urged To Ensure ‘Benefit Sharing' Of Covid-Related Data

Biopharma firms should reach vaccines, medicines to poor nations at an affordable price, say civil society bodies

time-read
2 Minuten  |
April 29, 2020
With No Clear Signal From Rlys, States Explore Ways To Bring Back Migrants
The Hindu Business Line

With No Clear Signal From Rlys, States Explore Ways To Bring Back Migrants

Quarantine centres, cross-country buses being arranged even as migrants hop on to boats, trucks and ambulances

time-read
2 Minuten  |
April 28, 2020
Centre Allows All Neighbourhood Shops To Open But With Riders
The Hindu Business Line

Centre Allows All Neighbourhood Shops To Open But With Riders

Final call will be taken by local authorities; shopping complexes that draw fewer ‘outsiders’ are permitted to operate

time-read
2 Minuten  |
April 28, 2020
Covid Impact Relatively Muted In India
The Hindu Business Line

Covid Impact Relatively Muted In India

Compared to Italy and the US, India’s rate of infection spread has been slow. This can be attributed to the strict measures in place

time-read
4 Minuten  |
April 28, 2020
How Global Trade Will Fare Post-Covid
The Hindu Business Line

How Global Trade Will Fare Post-Covid

China isn’t likely to lose its pre-eminent position soon. India, for one, will need to make manufacturing globally competitive

time-read
4 Minuten  |
April 28, 2020
How To Curb Harassment In The Virtual Office
The Hindu Business Line

How To Curb Harassment In The Virtual Office

Training and sensitisation are essential. Institute a strict dress code and chat etiquette to ensure professionalism during video calls

time-read
3 Minuten  |
April 28, 2020