Though abolishing the Dividend Distribution Tax (DDT) may have left companies with extra distributable funds, the receipt of dividends/income from mutual funds may burn a hole in the pockets of individuals. DDT was payable by the company for the shareholder’s income.

However, with effect from FY 2020-21, DDT chargeable on companies has been abolished and income from dividends and mutual funds shall now be subject to tax in the hands of shareholders, as per their tax status. The government has shifted to a classical system of taxation again with effect from this year.