According to a Motilal Oswal analysis, 60–65% of the increase in personal income tax during the previous four years was attributable to taxes paid on dividend income.

The paper claims that even while the growth in personal disposable income has slowed recently, the dividend tax is to blame for the significant increase in personal income tax.

Throughout FY21–24, personal income taxes—which are paid by entities other than corporations—have climbed at a compound annual rate of 20%. They increased from 2.5% of GDP in the years prior to the pandemic to 3.5% in FY24. In contrast, the rise of GDP and personal disposable income has been less than 10%.

"To remove the dividend distribution tax and adopt the classical system of dividend taxation under which companies would not be required to pay DDT," stated the finance minister in her 2020–21 budget address. Only the receivers will be taxed on the payout at the appropriate rate."

This indicates that DDT was moved from company taxes to personal income taxes in FY21, marking the end of DDT in its previous form. As a result of this adjustment, the dividend tax rate was also modified from 15% (plus surcharges and cess) to the individual taxpayer's personal income tax. According to the analysis, these two connected factors account for between 60 and 65 percent of the increase in PIT in the years after the pandemic.

Under corporate taxes, DDT amounted to Rs50,000 crore in FY20, or 0.3% of GDP. "In 2023, the wealthiest 20% of incomes in the US possessed 87% of shares in mutual funds and corporate equities. There is probably a similar tendency in India, where dividend payments are subject to a higher tax rate as of FY21. The research also stated that the effective dividend tax rate, including surcharges, might be 35–40%, which would be double the rate from prior to FY21.

Assuming an effective tax rate of 36%, the research projects that dividend taxes might amount to Rs1.8–2 lakh crore, or 0.6-0.7% of GDP, in FY24. The 60–65% rise might be explained by this change from company taxes to personal income taxes. With dividend taxes excluded, PIT growth increases at a rate consistent with nominal GDP growth, reaching 2.8% of GDP in FY24 from 2.4% in FY23.