Zerodha’s ₹ 100 cr salary proposal points to India’s tax anomalies
Live MintThe board of Zerodha Broking Ltd has passed a resolution to pay up to ₹100 crore in salary to three directors. In a nutshell, one of his main defences is that for a bootstrapped firm that doesn’t want to sell shares to outside investors, receiving high salaries is one of the most flexible ways for founders to take liquidity out. “A differential treatment of income from dividend/interest and capital gains introduces opportunities for distorted arbitrage arising between different maturities and different coupons and also leads to window dressing opportunities for tax purposes. A uniform policy would have enabled Zerodha’s promoters to take out liquidity by receiving dividend and avoid the negative publicity of receiving unusually high salaries. But when seen in the backdrop of adverse tax implications of receiving dividend, the news doesn’t so much reflect poorly on Zerodha’s remuneration policies, as it does on India’s tax policies.
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