Be ready to pay dividend tax if your dividend income is above Rs 10 lakh

Finance Minister Arun Jaitley said taxpayers will have to pay an additional dividend tax if their dividend income is above Rs 10 lakh.

This tax is besides the dividend distribution tax being paid by the companies declaring such dividends.

These amendments were made to the Financial Bill 2016 and have been approved by the Lok Sabha.

This amendment will be effective for the assessment year 2017-18 and subsequent assessment years.

There were 21 amendments in the Bill. Another amendment cut the duration for holding of shares in an unlisted company for being classified as long term capital asset. The duration of holding has been reduced from 36 months to 24 months.

Yet another amendment extended the benefit of weighted deduction of 150 per cent of expenditure incurred on notified agricultural extension projects till March 31, 2020 (FY2019-20 or Assessment Year 2020-21) instead of Budget proposal to restrict the deduction to 100 per cent from 2017-18 fiscal (Assessment Year 2018-19).

Another amendment included Limited Liability Partnership (LLP) in the definition of 'start-up' firms.

Jaitley had in his Budget provided exemption from payment of Securities Transaction Tax (STT) on transactions undertaken in foreign currency on a recognised stock exchange in International Financial Services Centre (IFSC) and extended the benefit of exemption for long term capital gains.

However, by implication, benefit of 15 per cent of tax on short term capital gain under section 111A may have been denied in case of such transactions owing to non-fulfilment of condition of payment of STT.

So, an amendment was brought "to provide that the concessional rate of 15 per cent on short term capital gain will be available in respect of the transactions which take place in foreign currency on a recognised stock exchange even if STT is not paid."

(Image: Indiatimes)