Consider the following statements with reference to taxation in Budget 2020.
1. Dividend Distribution Tax (DDT) was abolished.
2. Tax on cooperative societies was to be reduced to 22% plus surcharge and cess as against 30% at present.

Correct option is B

The correct answer is (b) Both 1 and 2
Explanation:
· In Union Budget 2020, the government abolished Dividend Distribution Tax (DDT).
· Dividend income is now taxable in the hands of recipients, not companies.
· Tax on cooperative societies was reduced to 22% + surcharge + cess, aligning them with corporate tax rates.
· This was part of an effort to simplify and rationalize the tax structure.
· It also aimed to boost investment and ease of doing business.
Information Booster:
· DDT was earlier charged at 15% (plus surcharge and cess).
· The tax change aimed to avoid the cascading effect of triple taxation.
· Companies are now required to deduct TDS on dividends beyond certain thresholds.
· The new system is optional under Section 115BAC.
· Budget 2020 also introduced new income tax slabs with no exemptions.
Additional Information:
· DDT was first introduced in 1997 under the Finance Act.
· The reform was aligned with global practices where shareholders bear the tax burden.
· The change encouraged foreign portfolio investors (FPIs) to invest more.
· Both statements are correct and reflect major tax reforms of FY 2020–21.