From 1 April 2020, Dividend Income will be taxable in the hands recipient shareholders as per the slab rate applicable on them. Earlier Dividend Income was exempt in the hands of Shareholders under Section 10(34) and tax on such dividend was payable by the Company under section 115-O.

In which Year Dividend is Taxable when it declared or when it is received?

As per Section 8 of Income Tax Act 1961

  • Any deemed dividend under Section 2(22)(a)/(b)/(c)/(d)/(e) shall be deemed to be income of the year in which it is distributed or paid by the company.
  • Any final dividend declared by a company shall be deemed to be the income of the year in which it is so declared at the AGM.
  • Any Interim dividend shall be deemed to be the income of the year in which it is received.

Whether any Expenses are allowed from Dividend Income?

As per proviso of Section 57, only interest expense subject to a maximum limit of 20% of Dividend income of that year and no other expenses are allowed to be deducted.

From 1 April 2020, Dividend Income will be taxable in the hands recipient shareholders as per the slab rate applicable on them. Earlier Dividend Income was exempt in the hands of Shareholders under Section 10(34) and tax on such dividend was payable by the Company under section 115-O.

In which Year Dividend is Taxable when it declared or when it is received?

As per Section 8 of Income Tax Act 1961

  • Any deemed dividend under Section 2(22)(a)/(b)/(c)/(d)/(e) shall be deemed to be income of the year in which it is distributed or paid by the company.
  • Any final dividend declared by a company shall be deemed to be the income of the year in which it is so declared at the AGM.
  • Any Interim dividend shall be deemed to be the income of the year in which it is received.

Whether any Expenses are allowed from Dividend Income?

As per proviso of Section 57, only interest expense subject to a maximum limit of 20% of Dividend income of that year and no other expenses are allowed to be deducted.

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