Will TDS be deducted on your dividend?
A domestic company deducts 10% at source under section 194 once the dividends it pays you cross ₹10,000 in a financial year. The threshold is per company, which is the part that surprises people.
Will TDS be deducted?
₹1,200
₹12,000 crosses the ₹10,000 threshold, so 10% is deducted on the whole amount — you receive ₹10,800.
The threshold is per company. ₹9,000 from each of six companies is ₹54,000 of dividend income and no TDS anywhere. Run this once per holding, not on your portfolio total.
Deducted is not the same as owed. TDS is credited against your bill when you file, and dividends are taxed at your own slab rate — so this is a cash-flow timing figure, not your tax on the dividend.
Without a valid PAN linked to the folio, section 206AA applies 20% instead — ₹2,400 here. Form 15G or 15H stops the deduction entirely for those whose income is below the taxable limit.
Section 194 covers dividends from domestic companies. REIT and InvIT distributions are deducted under a different section and by component, so this figure does not apply to them.
Why per company matters
The limit is read against each company’s own payments to you. Hold six stocks that each pay you ₹9,000 and nothing is deducted anywhere, even though you received ₹54,000 of dividend income and owe tax on all of it at your slab rate. The bill arrives when you file rather than during the year, which is a cash-flow difference worth planning for and not a saving.
Once crossed, the whole amount is deducted
The threshold is a trigger, not an exemption. Cross it by a rupee and the 10% applies to the entire dividend for the year, not just the part above ₹10,000.
Figures stated for FY 2026-27 and reviewed each February, when the Budget changes take effect from 1 April. Sources: ClearTax — Section 194, Tax2win — TDS rate chart. This is general information about how the deduction works, not tax advice, and it does not account for your residency, PAN status or any declaration you have filed.