How much tax do I pay on dividends from stocks in India?

Here’s a simple guide to understanding dividend taxation in India:

1. No More Dividend Distribution Tax (DDT): Earlier, companies paid a tax (DDT) on the dividends they distributed. Now, this tax has been removed.
2. Tax on Dividend Income: Now, the tax on dividends is paid by the person receiving it. This means your dividend income is added to your total income and taxed according to your regular income tax rate.
3. Tax Deducted at Source (TDS):
   • TDS Threshold: If you receive more than ₹5,000 in dividends in a financial year from a company, a 10% TDS will be applied.
   • TDS Exemption: If your total income is below the taxable limit, you can claim a full refund of this TDS.

Key Points:

• No Fixed Tax Rate for Dividends: Dividends are taxed at your regular income tax rate.
• TDS Consideration: Remember the ₹5,000 TDS threshold and claim a refund if eligible.

Consult a Tax Expert: For tailored tax advice, it’s best to speak with a tax professional. They can help you understand your specific tax situation and assist with filing.

By knowing these basics, you can better plan your investments and manage your taxes.