Indian Tax Tribunal applies beneficial treaty rate to dividend distributed during the dividend distribution tax regime

Executive summary

The Indian Tax Tribunal¹ ruled on 30 April 2021 that tax on dividend income earned by a nonresident shareholder during the dividend distribution tax (DDT) regime must be limited to the applicable in-force tax treaty rate. The Tribunal ruled that dividend income was subject to tax in the hands of shareholders even during the DDT regime, as the imposition of tax was merely shifted to the company distributing the dividends for administrative convenience, and therefore, the tax…