What is Dividend ?
Dividend means the distribution of rewards from a portion of the company's earning and is paid to its shareholders. Dividend is a part of the profit that a company shares with its shareholders. Dividends can be issued as cash payments or as shares of stock or any other kind, though cash dividends are most common.
Taxation on Dividend received from Indian Companies (Domestic Companies):
Sec 10 (34) of Income Tax Act deals with the dividend received from Indian Companies is exempted from Tax upto Rs. 10 lakh. According to Sec 115BBDA of Income Tax Act, if Dividends income from an Indian Company exceeds Rs. 10 lakh in a financial year, then tax will be charged @ 10%.
Taxation on Dividend received from Mutual Funds
Sec. 10(35) of Income Tax Act deals with the dividend received from Mutual Funds specified under clause 23D is exempted from Tax.
Suppose an Individual earned Rs. 11 lakh as dividend from Mutual Fund in a financial year. Is it taxable at the rate of 10% as it exceeds Rs. 10 lakh ?
As per Sec. 115BBDA of Income tax Act, dividend distributed or paid by domestic companies is subject to tax if it exceeds Rs. 10 lakh. It does not include dividend distributed by mutual funds. Dividend received from Mutual Fund is still exempt u/s 10(35) of Income Tax Act. So Dividend of Rs. 11 lakh from Mutual Fund is exempted from tax.
Dividend means the distribution of rewards from a portion of the company's earning and is paid to its shareholders. Dividend is a part of the profit that a company shares with its shareholders. Dividends can be issued as cash payments or as shares of stock or any other kind, though cash dividends are most common.
Taxation on Dividend received from Indian Companies (Domestic Companies):
Sec 10 (34) of Income Tax Act deals with the dividend received from Indian Companies is exempted from Tax upto Rs. 10 lakh. According to Sec 115BBDA of Income Tax Act, if Dividends income from an Indian Company exceeds Rs. 10 lakh in a financial year, then tax will be charged @ 10%.
Taxation on Dividend received from Mutual Funds
Sec. 10(35) of Income Tax Act deals with the dividend received from Mutual Funds specified under clause 23D is exempted from Tax.
Suppose an Individual earned Rs. 11 lakh as dividend from Mutual Fund in a financial year. Is it taxable at the rate of 10% as it exceeds Rs. 10 lakh ?
As per Sec. 115BBDA of Income tax Act, dividend distributed or paid by domestic companies is subject to tax if it exceeds Rs. 10 lakh. It does not include dividend distributed by mutual funds. Dividend received from Mutual Fund is still exempt u/s 10(35) of Income Tax Act. So Dividend of Rs. 11 lakh from Mutual Fund is exempted from tax.
