Mumbai, Mar 1 The finance minister’s Budget decision to increase the dividend distribution tax rate from 12.5% to 15% has not gone down well with corporates or investors.

According to an FE Research Bureau computation, India’s 1,553 major companies will have to cough up an additional Rs 1,043 crore as dividend tax, taking the total tax payout to Rs 6,257 crore. The estimated dividend tax was calculated on the basis of their 2005-06 balance sheet.

Interestingly, among the top ten dividend tax payers were six big PSUs like ONGC (from Rs 802.09 crore to Rs 962.51 crore), NTPC (Rs 288.59 crore to Rs 346.31 crore) and Indian Oil Corp (Rs 182.50 crore to Rs 219 crore).

Among others, the dividend tax liability of Reliance Industries would be up from Rs 174.19 crore to Rs 209.03 crore, Infosys Technologies (Rs 154.75 crore to Rs 185.70 crore), Hindustan Lever (Rs 137.58 crore to Rs 165.09 crore), ITC (Rs 124.39 crore to Rs 149.27 crore), GAIL (Rs 105.71 crore to Rs 126.85 crore), Sail (Rs 103 crore to Rs 123.91 crore) and Tata Steel (Rs 89.94 crore to Rs 107.93 crore).

Among 1,553 companies selected for this study, the lowest dividend tax paid was by Gujarat Alkalies (Rs 1.84 crore to Rs 2.20 crore), Mastek (Rs 1.75 crore to Rs 2.10 crore), West Coast Paper Mills (Rs 1.68 crore to Rs 2.01 crore), Divi’s Laboratories (Rs 1.60 crore to Rs 1.92 crore) and Century Enka (Rs 1.50 crore to Rs 1.80 crore).

According to market observers, one effect of the increased tax on dividends will be that companies could scurry to declare interim dividends before the year was out. On the other hand, they also have the option of declaring a bonus issue instead of a dividend payout, they added.