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Money > Business Headlines > Report April 6, 2002 | 1155 IST |
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Firms to save Rs 20 billion on dividend tax normsP Vaidyanathan Iyer The proposed change in dividend taxation norms will save corporates around Rs 20 billion. The 2002-03 Budget proposed to shift the incidence of the 10 per cent dividend tax from companies to shareholders. According to the Centre for Monitoring Indian Economy, the aggregate profit after tax for 1,429 dividend-paying companies in 2000-01 stood at Rs 625.96 billion, while the dividend payment amounted to Rs 195.66 billion. The dividend distribution tax paid by the companies was Rs 19.56 billion. The CMIE has estimated that the reduction in corporate tax for foreign companies could lead to firms saving Rs 8.65 billion. The aggregate profit before tax of 239 foreign companies in 2001-02 was Rs 108.20 billion. These companies paid a total tax of Rs 34.36 billion. The 239 companies exclude several closely held foreign companies operating in India. Their inclusion would increase this figure further, the centre pointed out. The proposal to allow banks and financial institutions to deduct up to 7.5 per cent of their total income against provisions for bad and doubtful assets, compared to 5 per cent earlier, would also benefit the sector to the tune of Rs 10 billion, CMIE said. Banks and financial institutions will, however, need to provide 10 per cent provision for bad and doubtful assets. The gross non-performing assets of banks and financial institutions as on March 31, 2001, stood at Rs 805 billion. The combined doubtful and loss assets aggregated to about Rs 570 billion. Increase in the available deduction by 2.5 percentage points to 7.5 per cent would translate into savings of Rs 10 billion, CMIE estimated. ALSO READ:
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