Do one need to pay tax on Dividend Income?

It can be classified in two types:

  1. Dividend received from Indian company:

When a dividend is received from an Indian company it is exempt from tax, because the company issuing the dividends is already deducting Dividend Distribution Tax (DDT) before crediting the amount.

In the case of a resident individual receiving dividends from a domestic company whose aggregate value of dividends exceeds Rs. 10,00,000 during a year, it is subjected to 10% tax rate(Section 115BBDA Finance Act, 2016). The tax will only be chargeable on the amount exceeding Rs. 10,00,000.

  1. Dividend Received from Foreign company:

The dividend received from a foreign company is taxable under the head of “income from other sources”. The amount of the dividend will be included in the total income of the taxpayer and will be charged accordingly.

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