In a relief to HNIs, dividend income surcharge now restricted to 15%

By: |
March 25, 2020 2:06 AM

Additionally, the Finance Bill provides the same benefits to pension funds as were available to sovereign wealth fund investing in eligible infrastructure projects.

The provisions include investment in InvIT, AIF- Category-I, Category-II which invest in infrastructure sector would also be eligible for such exemptions.The provisions include investment in InvIT, AIF- Category-I, Category-II which invest in infrastructure sector would also be eligible for such exemptions.

The Finance Bill, 2020, passed by Parliament on Monday provided relief to the high net-worth individuals (HNIs) with a cap on surcharge of 15% on dividend income as opposed to surcharge of up to 37% on taxable income.

This comes after the government reverted to classical way of taxing dividend in the hands of recipient rather than the corporate. However, this means that dividend income would attract surcharge applicable on the taxable income — which is 25% for Rs 2-5 crore of annual taxable income and 37% for above Rs 5-crore income.

“The amendment in the Finance Bill provided that in the newly introduced classical system of taxation of dividend, the incidence of surcharge on dividend income would not exceed 15%. This system would also not lead to unfair tax burden for the dividend earners who are in lower tax brackets,” a government official said.

Additionally, the Finance Bill provides the same benefits to pension funds as were available to sovereign wealth fund investing in eligible infrastructure projects.

The benefits include exempting dividend, interest and long-term capital gains income, earned from debt or equity investments made on or before March 31, 2024, in eligible infrastructure or other notified business entities.

The provisions include investment in InvIT, AIF- Category-I, Category-II which invest in infrastructure sector would also be eligible for such exemptions.

Further, the Finance Bill exempted the unit-holder of SPV, which are investment vehicles for REIT/InvIT, from paying tax on dividend if it has opted for the concessional corporate tax scheme of 22%.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1India may increase import duty on a chemical from Korea
2RBI gives more time to states to avail additional market borrowing, overdraft facility
3India among worst performing economies in world; stimulus inadequate: Abhijit Banerjee