1Is dividend income taxable in India?
Yes — dividends are taxed in your hands at your slab rate , with no exemption. TDS is deducted above a threshold and appears in your AIS; claim credit for it against your final tax.
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ArticleDividends from shares and mutual funds used to be tax-free in investors' hands, but that changed — they're now taxable at your slab rate. Here's how dividend income is taxed and what you can do about it.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-13
Quick answer
Dividends are now taxed in your hands at your slab, with TDS above a threshold. Here's how to report them and reduce the tax.
Dividends from Indian companies and mutual funds are added to your income and taxed at your normal slab rate. There's no special lower rate and no exemption in your hands, so a large dividend simply stacks on top of your other income.
Companies deduct TDS on dividends once they cross a threshold for the year, and it shows in your 26AS/AIS. Claim full credit for that TDS against your final tax. If your total income is below the taxable limit, you can submit Form 15G/15H to avoid the deduction where you genuinely qualify.
All your dividends are reported to the tax department and appear in your AIS, so reconcile your broker and registrar statements against it and report the full amount. Missing small dividends is a common, avoidable trigger for a mismatch notice.
If you borrowed to invest in shares, you can claim interest on that borrowing against your dividend income, capped at 20% of the dividend. It's a narrow deduction, but useful for leveraged investors who would otherwise pay tax on the gross dividend.
Because dividends are taxed at slab and TDS may not cover your full liability, a big dividend can create advance-tax exposure. If your tax after TDS will cross Rs 10,000, pay the balance in the next instalment to avoid 234B/234C interest.
Yes — dividends are taxed in your hands at your slab rate , with no exemption. TDS is deducted above a threshold and appears in your AIS; claim credit for it against your final tax.
Yes — companies deduct TDS once dividends cross the threshold for the year. Claim full credit for it, or file Form 15G/15H to avoid the deduction if your income is genuinely below the taxable limit.
Only interest on money borrowed to buy the shares, capped at 20% of the dividend. No other expenses are deductible against dividends, so the rest is taxed at your slab.
Earning dividends across several companies and funds? Write to the firm and we'll reconcile your AIS and get the tax right.