TAX OF DIVIDEND INCOME
- Incidence of Dividend Distributed Tax @ 20.56% on payer Companies/Mutual Funds abolished. Dividend taxable in the hands of shareholders/unit holders at applicable slab rates w.e.f 01.04.2020.
- Dividends received on or after 01.04.2020 but which have been declared before 31.03.2020 will be included in the total income of the shareholders only if DDT has not been paid; and Enhanced tax on dividends u/s 115BBDA where applicable, has not been paid, on such dividends.
- Surcharge on dividend income for a taxpayer being an individual, HUF, AOP, BOI or AJP restricted to 10% if total income (incl. dividend) does not exceed Rs. 1,00,00,000 and 15% if total income (incl. dividend) exceeds Rs. 1,00,00,000 (instead of the higher rate of surcharge of 25% / 37%)
- Section 115BBDA – Dividend income in excess of ₹10 lakhs taxed @10% abolished w.e.f 01.04.2020.
- No deduction for expenses u/s 57 except interest to the extent of up to 20% of dividend income.
- Section 80M – Domestic company earning dividend income can avail deduction of dividends received from domestic companies, foreign companies, business trusts to the extent of dividend distributed by the first mentioned domestic / foreign company/ business trust on or before one month prior to the date for furnishing the return of income under Section 139(1). Domestic companies opting for concessional tax rates u/s 115BAA & Section 115BAB can avail deduction w.e.f AY 2021-22.
- TDS on Dividend Distributed to resident @ 10% (Threshold limit ₹5,000/-) & TDS @ 20% on dividend to non-residents/ foreign companies.
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