Budget 2008-09 proposed that the domestic parent company will be allowed to set off the dividend received from its domestic subsidiary companies against dividend distributed by the parent, provided the dividend received has suffered DDT and the parent company is not a subsidiary of another company.

This proves to be good news for all financial conglomerates and will enable them to structure and allocate capital to their business more efficiently. Further, the proposed change would help to mitigate the cascading effect of taxation on dividend.