Finance Minister vs Motilal Oswal on Dividend Distribution Tax

In her second Budget presentation, Sitharaman has proposed to abolish dividend distribution tax (DDT) on the dividend declared by companies to shareholders.

Mumbai: The Union Finance Minister Nirmala Sitharaman had an interesting duel with veteran i-banker Hemendra Kothari and Motilal Oswal, the promoter of a brokerage house named after himself at a post-budget interaction in the country’s financial capital.

While Oswal pointed out that the DDT move is pinching promoters dearly because they are anyways in high tax bracket and claimed that the overall outgo is going till 58 per cent.

"You (Oswal) are talking about one section, whereas we thought that we want to put money in the hands of the other section which is the retail," the Finance Minister said.

When Oswal replied saying promoters may not declare dividends at all because of the tax liability, Sitharaman had an interesting retort.

"Will the shareholders be tempted to go to the company which does not pay dividends?"

Later, she clarified at a press conference that a lot of thought was given to the issue of DDT.

"The middle class will pay lesser than what they were paying. a middle-class shareholder will have more money now," she said.

In her second Budget presentation, Sitharaman has proposed to abolish dividend distribution tax (DDT) on the dividend declared by companies to shareholders.

Once the DDT is abolished, the dividend amount will be added to investors' taxable income and taxed as per the individual tax bracket.

(With inputs from PTI)