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Prior to the Finance Act, 2020, companies and mutual funds were liable to pay “Dividend Distribution Tax” on dividends declared or distributed. Therefore, Dividend income was exempted in the hands of shareholders. However, Finance Act, 2020 deleted the concept of Dividend Distribution tax and Tax on dividends income will be in the hands of shareholders for all the dividends paid or distributed by a Company on or after 1st April 2020. At par with other provisions of the Income tax Act, Finance Act, 2020 imposed liability to deduct TDS on dividend Income distributed/paid to shareholders. Hence, the Company will have