DDT vs DTAA ‘tax-rate controversy’- Mumbai Tribunal Special Bench ruling

The taxation of dividends underwent a change when in Finance Act 2020, dividends were made taxable in the hands of shareholders. Prior to this, since 1997, the dividend-paying company had to pay the Dividend Distribution tax (DDT). A question arose where dividends were distributed to non-residents whether the DDT rate had to be restricted to the rate of tax on dividends as specified in tax treaties.

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