Investors who earn dividends over Rs 10 lakh per annum have to pay 10% tax on the gross dividend amount. This is in addition to the Dividend Distribution Tax (DDT) already being paid by corporates.

This proposal was announced in Union Budget 2015-16 when the Finance Minister said: Dividend Distribution Tax (DDT) uniformly applies to all investors irrespective of their income slabs. This is perceived to distort the fairness and progressive nature of taxes. Persons with relatively higher income can bear a higher tax cost.