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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products

Under the Income-tax Act as applicable for recent assessment years, an individual resident investor receives dividend from shares of an Indian company. How is this dividend taxed in the investor's hands?

Dividend from Indian company shares is taxed in the recipient's hands at the individual's slab rate under income from other sources, because dividend distribution tax was abolished. It is neither exempt nor taxed at a flat rate or as capital gains.

  1. AExempt in full under Section 10(34)
  2. BTaxed at the investor's applicable slab rate as income from other sourcesCorrect
  3. CTaxed at a flat 10% irrespective of income
  4. DTaxed as capital gains at 12.5%

Explanation

Since the abolition of Dividend Distribution Tax, dividends are taxable in the shareholder's hands as income from other sources at slab rates. The exemption and flat rates do not apply to resident individuals; TDS may also apply above the threshold.

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