Centre may withdraw dividend distribution tax in Budget 2018

Move to encourage firms to give more dividends

by Nidhi Bhati

The government may announce withdrawal of dividend distribution tax (DDT) in the upcoming Union Budget for 2018-19, as per a report in Business Standard. Currently, a company offering dividend to its shareholders has to pay a DDT of 20.36 per cent. This includes 15 per cent of tax plus surcharge and cess. Corporates have been expressing dissatisfaction over the imposition of DDT as it increases their tax burden. They have to pay income tax on their profits in addition to DDT. Experts believe that the move to do away with DDT will boost India Inc’s ease of doing business, encourage firms to give more dividends and improve returns for retail investors in the lower income tax bracket. They expect the government to retreat to the old system of dividend taxation where individual investors were taxed based on their income tax bracket.

References
1. http://www.business-standard.com/budget/article/budget-bonanza-govt-likely-to-do-away-with-dividend-distribution-tax-118011200067_1.html
CMIE STATISTICS
Unemployment Rate
Per cent
4.8 +0.0
Consumer Sentiments Index
Base September-December 2015
97.2 -0.2
Consumer Expectations Index
Base September-December 2015
96.5 0.0
Current Economic Conditions Index
Base September-December 2015
98.2 -0.5
Quarterly CapeEx Aggregates
(Rs.trillion) Mar 17 Jun 17 Sep 17 Dec 17
New projects 4.00 2.11 1.18 0.84
Completed projects 1.95 0.86 1.03 0.90
Stalled projects 0.74 2.67 0.67 0.80
Revived projects 0.86 0.30 0.29 0.20
Implementation stalled projects 0.33 0.69 0.73 0.58
Updated on: 22 Jan 2018 9:20AM
Quarterly Financials of Listed Companies
(% change) Mar 17 Jun 17 Sep 17 Dec 17
All listed Companies
 Income 10.2 9.7 7.9 10.8
 Expenses 11.9 10.0 9.2 10.5
 Net profit 16.1 -19.8 -20.0 15.0
 PAT margin (%) 6.0 5.3 5.4 14.9
 Count of Cos. 4,460 4,387 4,310 153
Non-financial Companies
 Income 11.8 10.3 7.7 9.9
 Expenses 15.6 10.6 7.8 9.8
 Net profit -2.3 -25.2 -7.9 13.9
 PAT margin (%) 6.2 5.2 6.1 14.6
 Net fixed assets 6.9 9.0
 Current assets 2.7 78.0
 Current liabilities 8.8 10.6
 Borrowings 4.9 10.1
 Reserves & surplus 6.3 4.8
 Count of Cos. 3,448 3,406 3,346 111
Numbers are net of P&E
Updated on: 22 Jan 2018 9:20AM
Annual Financials of All Companies
(% change) FY14 FY15 FY16 FY17
All Companies
 Income 10.0 5.3 1.4 6.6
 Expenses 9.9 5.4 1.5 7.1
 Net profit -2.5 1.6 -12.6 18.7
 PAT margin (%) 3.1 3.2 2.9 5.7
 Assets 12.3 9.4 9.8 8.3
 Net worth 9.6 8.7 10.8 7.2
 RONW (%) 6.1 6.1 5.1 8.3
 Count of Cos. 24,439 24,353 22,049 8,816
Non-financial Companies
 Income 9.7 4.5 0.5 6.4
 Expenses 9.4 4.6 -0.3 7.6
 Net profit -3.1 -5.5 12.5 11.8
 PAT margin (%) 2.2 2.1 2.6 5.3
 Net fixed assets 11.7 13.3 15.6 7.3
 Net worth 8.2 7.1 11.2 5.3
 RONW (%) 5.0 4.9 5.4 9.0
 Debt / Equity (times) 1.1 1.1 1.1 0.8
 Interest cover (times) 2.0 1.9 2.0 2.9
 Net working capital cycle (days) 69 67 65 52
 Count of Cos. 19,688 19,805 18,467 6,761
Numbers are net of P&E
Updated on: 21 Jan 2018 12:27PM

Data added for HPI at Assessment prices and HPI at Market prices