Dividend distribution tax
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Dividend distribution tax is the tax levied by the Indian Government on companies according to the dividend paid to a company's investors.
At present the dividend distribution tax is 15% [1], according to the Union Budget 2007, India.
As per existing tax provisions, income from dividends is tax free in the hands of the investor. However, this is not to say that there is no tax levied at all. On the contrary, there is a levy of 15% of the dividend declared as distribution tax. This tax is paid out of the profits/reserves of the company declaring the dividend.
