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

Which of the following is correct regarding dividend income received by a resident individual from an Indian company?

Dividend from an Indian company is taxable in the shareholder's hands under Income from Other Sources at the individual's applicable slab rate. It is neither exempt nor taxed as capital gain, and the earlier Rs 10 lakh threshold belonged to the former dividend regime.

  1. AIt is fully exempt in the hands of the shareholder
  2. BIt is taxable under the head Income from Other Sources at the slab rate applicable to the individualCorrect
  3. CIt is taxed as long-term capital gain at a special rate
  4. DIt is taxable only if it exceeds Rs 10 lakh

Explanation

Under the current regime dividend is taxable in the shareholder's hands as Income from Other Sources at slab rates, with TDS by the company where applicable. The Rs 10 lakh threshold related to the earlier dividend tax regime, and it is not a capital gain.

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