NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products
A resident individual receives a dividend of Rs 50,000 from an Indian listed company. Under current law, how is this dividend taxed in the hands of the shareholder?
Dividend is taxed in the shareholder's hands as income from other sources at the slab rate. Dividend distribution tax was abolished from FY 2020-21, so the company no longer pays tax on distribution and the exemption was withdrawn.
- AExempt in full under Section 10(34)
- BTaxed as income from other sources at the shareholder's slab rateCorrect
- CTaxed at a flat 10% as capital gains
- DTaxed only in the hands of the company through dividend distribution tax
Explanation
Dividend distribution tax was abolished from FY 2020-21. Dividends are now taxable in the shareholder's hands as income from other sources at the applicable slab rate. Tax deducted at source may apply above a threshold.
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