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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Income from Other Sources

Mrs. Sunita Rao, aged 45, a resident, owns shares of an Indian company and received a dividend of Rs 80,000 during the year. Her other income places her in the 30% slab (ignore cess and surcharge). Under the current law, what is the tax payable on this dividend?

Tax is Rs 24,000. Dividend from an Indian company is taxable in the shareholder's hands under Income from Other Sources at the applicable slab rate, here 30% of Rs 80,000, ignoring cess and surcharge.

  1. ANil, since dividend is exempt in the hands of shareholders
  2. BRs 8,000 at 10%
  3. CRs 24,000 at her slab rateCorrect
  4. DRs 16,000 at 20%

Explanation

Since the abolition of dividend distribution tax, dividends are taxable in the shareholder's hands under Income from Other Sources at slab rates. At 30%, tax is 80,000 x 30% = Rs 24,000. Exemption or flat rates do not apply to a resident individual.

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