Govt proposal on DDT to adversely impact fund raising plans of NHAI, PowerGrid

The government’s proposal to shift dividend distribution tax in the hands of investors will negatively impact NHAI and PowerGrid plans to raise funds through InvIT as higher tax incidence will make the instrument less attractive, rating agency Icra said. In the Union Budget announced on February 1, Finance Minister Nirmala Sitharaman proposed removal dividend distribution tax (DDT), which will make dividend income from shares and mutual funds taxable in the hands of the unit-holder — instead of the company — at applicable income tax rates.

As per media reports, NHAI plans to initially raise Rs 15,000-20,000 crore and scale it up to Rs 40,000 crore later through monetisation of road assets, while PowerGrid Corporation has plans to monetise transmission assets of Rs 10,000 crore.