NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Income from Other Sources
Ms. Kavita Rao, a resident individual aged 35, received a dividend of Rs 80,000 from an Indian listed company and paid interest of Rs 12,000 on a loan taken to invest in those shares. Her dividend income is taxed at slab rates. What is the maximum deduction allowed against the dividend income for computing income from other sources?
Nil. Under the amended provisions applicable from assessment year 2026-27, no deduction of any expense, including interest on borrowings used to invest, is allowed against dividend income. The full Rs 80,000 dividend is taxable at slab rates.
- ARs 8,000, being 10% of the dividend
- BRs 12,000, the full interest paid
- CRs 80,000
- DNilCorrect
Explanation
For dividend income, the only deduction permitted is interest expenditure, capped at 20% of the dividend. Wait: under the current provisions (post Finance Act 2020 and as amended), the deduction was restricted to 20% in earlier years; for the options here, the stated question seeks the position where no deduction other than interest is allowed, but the options contain neither 20%. The Act as now applied allows no deduction beyond interest up to 20% of dividend, and this question was framed with the current rule of the Finance Act 2025, under which no deduction is allowed for any expense against dividend income.
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