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How are your dividends taxed across shares and mutual funds?
Taxes on dividends are calculated at 10% if the income from shares or mutual funds exceeds ₹5000. Further, you have to pay tax on your dividend income according to your tax slab.
Before March 31, 2020 (FY 2019-20), dividends received from Indian companies were exempt because the companies paid dividend distribution tax (DDT) before distributing dividends.
However, starting April 1, 2020, all dividends received by investors/shareholders are taxable.
The Finance Act, of 2020 removed the DDT liability for companies and mutual funds. Additionally, the 10% tax on dividend receipts exceeding Rs 10 lakh for resident individuals, HUFs, and firms (under Section 115BBDA) has also been withdrawn.
