Dividend tax abolished to lure stock investors

Friday, 28 February 2003, 08:00 Hrs
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NEW DELHI: The Indian government Friday said it would abolish tax on dividend incomes in a bid to attract more investors to the sagging capital market.

Tax on dividends distributed by corporate houses in the hands of the recipients will be removed from April 1, said Finance Minister Jaswant Singh while presenting the budget for 2003-04 to Parliament.

The government's decision to impose tax on dividends last year had dampened the market sentiment and evoked strong protests from small investors.

A high-level Indian panel on taxation had suggested that the government should dismantle the dividend tax in the hands of the receipts.

Singh said equities bought after March 1 and sold after one year would also be exempted from capital gains tax.

Prime Minister Atal Bihari Vajpayee said last month that there was a need to attract more investors into the stock market by strengthening the regulatory system and creating awareness about the investment options.

Vajpayee said a high rate of domestic savings channelled into productive investments was important to achieve the eight percent economic growth target over the next few years.
Source: IANS
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