{"id":6793,"date":"2018-06-19T01:19:38","date_gmt":"2018-06-18T19:49:38","guid":{"rendered":"https:\/\/www.antworksmoney.com\/blog\/?page_id=6793"},"modified":"2019-09-25T12:46:27","modified_gmt":"2019-09-25T07:16:27","slug":"dividend-distribution-tax","status":"publish","type":"post","link":"https:\/\/www.antworksmoney.com\/blog\/dividend-distribution-tax\/","title":{"rendered":"Dividend Distribution Tax"},"content":{"rendered":"

When a company announces dividends, it is liable to pay a tax on the amount that is paid as dividend. This tax is referred to as the dividend distribution tax and is payable by the company announcing the dividends. Investors can receive dividends from two types of companies, foreign and domestic. The tax situation for each of these is:<\/p>\n

Domestic Companies:<\/strong>\u00a0investors won\u2019t have to pay any tax on the income they earn from dividends announced by domestic companies that they may have invested in.<\/p>\n

Foreign Companies:<\/strong>\u00a0If the investor has invested in a foreign company then the dividends paid by the company will be taxable and the tax will have to be paid by the investors.<\/p>\n

The dividend distribution tax is also applicable to mutual fund investments but since investments in domestic equities (Indian companies) are exempt from this tax, it is applicable to investments in the money\/debt markets.<\/p>\n

Dividend Distribution Tax Rate:<\/h2>\n

While there is no tax on dividends when it comes to investors, there is a tax that the company will have to pay and it is paid at the rate of 15%. This rate will also apply to dividends that are distributed by the domestic company from the profits earned by its subsidiary that happens to be a foreign company.<\/p>\n

This tax, when it comes to mutual funds, is paid by the scheme and, as usual, is not applied to investments in domestic equities. However the tax on investments in debt\/money markets is as follows:<\/p>\n