All dividends from stocks and mutual funds are taxable in India. They are added to your annual income and taxed according to your personal income tax slab. Earlier, dividends were tax-free in the hands of investors, but now they are fully taxable. If you receive more than ₹5,000 as dividend from a single source in a financial year, 10% TDS is deducted.

Are Dividends from Stocks Taxable?

Yes, dividends you receive from Indian companies are fully taxable. These are added to your income and taxed as per your income tax slab. If the total dividend exceeds ₹5,000 from a company in a year, 10% TDS will be deducted before the dividend is paid to you. You can claim credit for this TDS while filing your income tax return.

Are Dividends from Mutual Funds Taxable?

Yes, dividends received from mutual funds are also fully taxable. They are added to your total income and taxed as per your slab. If you receive more than ₹5,000 in a year from a mutual fund house, 10% TDS is deducted before the dividend is credited to your bank account. You can submit Form 15G/15H to avoid TDS if your income is below taxable limits.

How is TDS Applied on Dividend Income?

If the dividend from a company or mutual fund exceeds ₹5,000 in a financial year, 10% TDS is deducted. For example, if you get ₹10,000 as dividend, ₹1,000 will be deducted as TDS, and you will receive ₹9,000. You can claim this TDS while filing your income tax return. If you are not liable to pay tax, submit Form 15G or 15H to avoid TDS deduction.

Do Foreign Dividends Have Different Tax Rules?

Yes, if you receive dividends from foreign companies, they are fully taxable in India. They are added to your income and taxed as per your income slab. Also, the foreign country may deduct some tax before paying the dividend. You can claim credit for that foreign tax under the Double Taxation Avoidance Agreement (DTAA) while filing your ITR in India.

Which ITR Form to Use for Declaring Dividend Income?

You need to report dividend income under ‘Income from Other Sources’ in your income tax return. If you are a salaried person with dividend income, you can use ITR-1 if the dividend is less than ₹5,000. For higher amounts or if you also have capital gains, use ITR-2. Always check the latest ITR instructions before filing.