Indian Individual Equity Holders' divIdends from Domestic Companies | Original Article

ABSTRACT:

This research compares business group-affiliated enterprises with independent firms on the National Stock Exchange (NSE) in India from 1995 to 2022 and analyses the factors that influence two key dividend policy decisions. Linked businesses are bigger, more lucrative, and better leveraged than the non-associated businesses. Based on the data, it seems that related businesses make different dividend policy choices than non-associated businesses. Dividend income is subject to taxation in India under the umbrella of other sources since the passage of the Income Tax Act, 1961. There has been a lot of upheaval in how dividend income is taxed because of all the changes that have been made over the years. Dividends are now taxed differently. U.S.-based firms that paid dividends to their shareholders, either recently or in the prior year, were also subject to a dividend distribution tax. However, after the distribution, the recipient's shares are once again taxable. Dividend recipients and the companies that pay them would have been severely impacted by this action. This study analyses the tax consequences for owners of domestic equity shares of firms paying dividends from 1997 through 2022. Stock or mutual fund shares are used to provide dividends to shareholders. There are dividends paid out on a large portion of their stock and mutual fund holdings. That's why many of you are anxious about having to pay taxes on your investment gains. Therefore, we need to learn more about how dividends are taxed. When a corporation pays out a significant portion of its profits to its shareholders on a consistent basis, its stock is considered a dividend stock. Huge, profitable corporations sometimes attempt declaring large dividends when they anticipate their stock prices remaining flat. This satisfies existing shareholders and draws new ones, driving up the stock price. There are two types of dividend payments that some firms make annual dividends and quarterly dividends. Consequently, if a company has a history of announcing large dividends, you should buy its stock upon hearing of an impending dividend announcement because you will not only receive the dividend (“by simply paying the share price during the purchase”), but you will also likely benefit from capital appreciation in the near future. Last but not least, dividends are an indication of financial health and growth for a corporation.