Comment on Bootstrapping vs Funding - a tax arbitrage

Prabal Basu Roy commented on 03 Jun 2021, 10:29 AM

Of course a correct premise brought out by Nitin. However the dividend scenario at 51% ( total tax) has the Corporate tax component of 25% too. This 25% Corporate tax needs to be added to the LTCG part of 12% tax adding upto a total of 37% ( 25% + 12% )for the LTCG tax outgo to make it comparable to the dividend option @ 51%.

Similarly for the unlisted option at 25% tax too we need to add the 25% corporate tax thus ading upto 50%…which is similar to the dividend option at 51% effective tax.

So the benefit comes from being listed given the favorable ( still ! ) CG dispensation for LTCG

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