April 02, 2002

'15'

    It has been reported in some sections of the Press that the Government stands to lose tax revenue due to the proposed shifting of the tax incidence from the company distributing dividend to the investor. The reports are based on the fact that the dividend distributed by the public sector companies and financial institutions to the Government would now go untaxed.

    It is clarified that there would be no loss to the Government on account of change of taxation norms of dividends, because in the prevailing system of taxation, the Government received only 90% of the dividends declared by the public sector companies and financial institutions and the remaining 10% came to the government as tax revenue. In the changed system of taxation of dividends, the Government would be receiving the whole of the dividend declared by the public sector companies and financial companies, as non-tax revenue.