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CMA Intermediate · Direct and Indirect Taxation · Income from Other Sources

Ravi, a resident individual, holds shares of an Indian company as an investor. He receives a dividend of Rs. 40,000 and gets Rs. 8,000 as interest on a savings bank deposit. He also has no other income. Which statement is correct as per section 92 of the Income-tax Act, 2025?

The full Rs. 40,000 dividend is taxable as income from other sources under section 92(2)(a). The Rs. 50,000 limit applies only to money received without consideration under clause (m), which is a different provision, so it gives no exemption for dividends.

  1. AThe Rs. 40,000 dividend is income from other sources, but the section 92(2)(m) gift rules apply to it because he received it without consideration
  2. BThe Rs. 40,000 dividend is income from other sources and is not a 'sum of money without consideration' under section 92(2)(m)Correct
  3. CThe Rs. 40,000 dividend is taxed as capital gains
  4. DThe Rs. 40,000 dividend is taxable only if it exceeds Rs. 50,000

Explanation

Dividend is taxed under section 92(2)(a) in full. The Rs. 50,000 threshold belongs to clause (m), which taxes receipts of money without consideration. A dividend is income arising from shares, not a gratuitous receipt, so no threshold applies and the full Rs. 40,000 is taxable.

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