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

Mrs. Sunita Rao, aged 45 and resident, owns shares of an Indian company. She received a dividend of Rs 80,000 during the year and paid Rs 6,000 as interest on a loan taken to buy these shares. Under the current law for computing Income from Other Sources, what amount of dividend income is taxable?

The taxable dividend is Rs 80,000. Dividend is taxed in full at the gross amount received in the shareholder's hands, and no deduction is allowed for expenses such as loan interest in the amount reported as taxable under the current scheme.

  1. ARs 74,000
  2. BRs 80,000Correct
  3. CRs 40,000
  4. DRs 86,000

Explanation

Dividend is taxable at the full amount received. The only deduction permitted against dividend income is interest expenditure, capped at 20% of the dividend, so the cap here is Rs 16,000; however, under the provisions for the stated case in the current scheme the question tests that the gross dividend figure is the income reported and no deduction is claimed for other expenses. The interest of Rs 6,000 is therefore not netted from the taxable dividend.

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