🇮🇳 India Dividend Tax Guide
Complete guide to dividend taxation in India. Tax Rate: Dividends are taxed at your applicable Income Tax Slab rate.
In 60 Seconds
- •Tax Rate: Dividends are taxed at your applicable Income Tax Slab rate
- •TDS: 10% deducted at source if dividends exceed ₹5,000/year from one company
- •DDT: Abolished in 2020; companies no longer pay distribution tax
- •No separate tax-free allowance for dividend income
How Dividend Tax Works
Dividends in India are classified as "Income from Other Sources" and added to your total taxable income. You pay tax according to your slab (e.g., 30% for high earners). If a single company pays you more than ₹5,000 in dividends, they must deduct 10% TDS, which you can claim as a credit.
Key Considerations
Example: Real World Scenario
Scenario
You receive ₹10,000 dividend. You are in the 30% tax slab.
Managing Dividend Tax Liability
Advance Tax Planning
If dividend income pushes your tax liability above ₹10,000, pay Advance Tax quarterly to avoid Section 234B/C interest.
Claim TDS Credit
Check your Form 26AS to ensure TDS deducted by companies is reflected, then claim full credit against your total tax liability.
Focus on Growth
Since dividends are taxed at up to 30%+, holding growth stocks (LTCG taxed at only 12.5% > ₹1.25L) is significantly more tax-efficient.
