InvestorQ : Is it true that the government is planning to scrap the dividend distribution tax (DDT)?
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Is it true that the government is planning to scrap the dividend distribution tax (DDT)?

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2 years ago
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While there is no official confirmation from the government, it has thrown adequate hints that a revamp of the present tax structure may on the way. Here are some key expectations that the markets have from the Finance Ministry.

a) DDT may be scrapped on equities and on equity mutual funds. Currently, the DDT is levied at a total rate of 20.35% and is also not eligible for set off.

b) This will automatically make the buyback tax redundant and that too can be scrapped encouraging the pending buyback plans to come back into the market.

c) The government has also hinted at a revamp of the LTCG tax, which is currently being taxed at 10% on equity and equity fund LTCG above Rs.1 lakh per annum. If this scrapped then it goes back to the status quo prior to April 2018.

d) There have also been strident demand for cutting the STT altogether but that may not happen considering that it is a good revenue mobilization measure and generates more than $1 billion each year.

The bottom line is that we have to wait for the actual announcement and most of these are still speculative in nature.

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