How dividends are taxed in India
The rules changed in 2020 and a lot of older advice is now wrong. Dividends are no longer tax-free in your hands.
Taxed at your own slab rate
Until FY 2019-20 companies paid Dividend Distribution Tax and the dividend arrived tax-free. From FY 2020-21 that was abolished: the dividend is added to your total income and taxed at whatever slab rate applies to you.
This means the same dividend is worth noticeably less to someone in the highest slab than to someone in the lowest — so a headline yield is a pre-tax number, and what you keep depends on your own position.
TDS is deducted before you receive it
Companies deduct tax at source under section 194 once dividends paid to you in a financial year cross a threshold. The deduction is not the final tax — it is credited against your liability when you file, and you settle any difference then.
If your total income is below the taxable limit you can file Form 15G or 15H to have the company skip the deduction rather than reclaiming it later.
What this site does and does not tell you
Amounts shown here are the gross figures declared by the company, before any deduction. We do not net off tax, because your slab rate is not something we know.
Rates and thresholds change with each Finance Act. Check the current position for the relevant year before relying on any figure.
Common questions
- Are dividends tax-free in India?
- Not since FY 2020-21. Dividends are added to your income and taxed at your slab rate; the company also deducts TDS above a threshold.
- Is the TDS deducted my final tax?
- No. It is credited against your total liability when you file your return, and you pay or reclaim the difference.
General information about how the rules work, not tax or investment advice. Rates and thresholds change with each Finance Act — check the current position for your situation.