I am an individual who is deriving salary as director of a Company and Income from other sources. For the FY 2017-18, I have received dividend from a listed domestic company (in which public is substantially interested ) to the extent of Rs 1 Cr. I have also received Dividend on Mutual Funds to the extent of Rs 32 lakhs. I want to know in each of the above cases, whether tax @10% would be applicable or the whole of these incomes would be exempt.
Dear Sir,
Dividend from domestic company is exempt up to Rs.10 lacs u/s 10(34) and thereafter you need to pay tax @10% u/s 115BBDA. Dividend from mutual funds is wholly exempt from tax u/s 10(34).
You need to pay tax @10% on 90 lacs i.e. 9 lacs. No deduction of expenses and investments is allowed from dividend income.
It is applicable on the resident shareholder during previous year.
Thanks
The dividend from company is taxable @ 10% on the amount that exceeds Rs.10,00,000/-. Hence Rs.90,00,000 is taxable @ 10%. Dividend on mutual fund is exempt u/s 10(35).
Hi,
In the case of a resident individual/HUF/Firm, the dividend from a listed domestic company shall be chargeable to tax at the rate of 10%, if the aggregate amount of dividend received from a domestic company during the year exceeds Rs 10,00,000 (Section 115BBDA).It is to be noted that tax shall be chargeable on dividend income to the extent it is in excess of Rs 10 lakhs in aggregate received from Indian companies.
As far as dividend from mutual funds is concerned, that will be fully exempt.
So net net you will need to pay tax @10% on 90 lakhs.
Hope that clarifies.
Regards,
Nikhil.
Dividend income received from listed company is exempt and dividend received from Mutual fund is also exempted. Because tax will already be deducted in form of Dividend Distribution Tax (DDT) at the time of declaration of dividend.
So, Tax is not required to be paid on your dividend income.
Hi,
Hope you are doing well !
Dividend received from Mutual funds are exempt u/s.10(35) of I.T.Tax Act 1961.
Dividend distribution tax is already paid by the company declaring dividend. So its exempt in hands of investor.
Thanks & Regards
Payal Chhajed
As per provisions of section 115BBBA, you will be liable to pay tax at 10% in respect of your dividend income which exceeds Rs 10 lakh.
Tax of 10% will be applicable on 1.22 crore.
Hi
Out of the total dividends received by you, dividends upto Rs. 10 lacs shall be exempt and needs to be reported under exempt income.
For the remaining 1.22 crores, 10% tax needs to be paid. It shall not be exempt.
Dividend income from a domestic company is exempt under section 10(34). However any excess over 10 lakh will be taxed at 10% (sec 115BBDA). In your case 90 lakh will be taxed at 10%.
Dividend from mutual funds are exempt under section 10(35).
Regarding Dividend I had a another query. I am a director of a Private limited Company and my PBT for the FY 2018 is 1.3Cr and I would want to withdraw dvidend of Rs 25 lakhs. I assume it ll not have effect on my profit as it has to be paid net of tax. what is the Dividend distribution tax which i have to pay on the same as a Company ? also in my hands as director, I would have to pay tax @10% for dividend received in excess of Rs 10 lakhs. So would it be better to declare dividend only upto the extent of Rs 10lakhs to save some tax in my hands ?
Dear Sir,
Yes payment of dividend can be made either from the current year profit or accumulated profits of past years. It should be net of taxes. DDT is 17.472% on gross dividend. You need to gross up the amount for payment of DDT i.e. if you need 10 lacs then gross up 10 lacs and pay DDT on gross amount resulting into net payment of Rs.10 lacs.
Yes in your hand dividend in excess of Rs.10 lacs will be taxable @10%.
Thanks
Effective rate of DDT is 20.56%.
Limit of 10 lakh is per shareholder so if you are the only receiver of dividend you can go ahead to declare Rs 1p lakh as total dividend.
The rate of dividend distribution tax is 15 percent plus surcharge of 12 percent and education cess of 3 percent totalling 20.36 percent.
Yes, it better if you take dividend upto 10 lacs.
The rate of dividend distribution tax is 20.36%.
It is advisable that you limit your dividend to 10 lacs.
Regards,
Nikhil
DDT rate is 15% on the grossed up amount making the effective rate to be 17.65%.
With surcharge and cess, net effective rate of DDT shall be 20.56%.
Yes, it is better to take dividends upto 10 lacs only.