How are dividends taxed in India?

Since the 2020 abolition of the Dividend Distribution Tax, dividends are taxable in the hands of the shareholder. The dividend is added to your total income and taxed at your applicable slab rate. There is no separate flat rate — a top-bracket investor effectively pays around 30% plus surcharge and cess.

What is the TDS on dividends?

Companies and mutual funds deduct tax at source (TDS) at 10% under Section 194/194K when total dividends to a resident exceed ₹5,000 in a financial year. This is only a prepayment — your actual liability is at your slab rate, and the TDS is credited against it when you file your return.

Can I avoid the 10% TDS?

If your total income is below the taxable limit you can submit Form 15G (or 15H for senior citizens) to the payer so no TDS is deducted. Otherwise the 10% is withheld and you claim it back as a credit, or pay the balance, at filing time.

Does the ₹5,000 threshold reset each year?

Yes. The ₹5,000 TDS threshold applies per payer per financial year. If your aggregate dividend from a single company or fund stays at or below ₹5,000 in the year, no TDS is deducted, though the dividend is still taxable at your slab rate.

Is this an exact figure?

No, it is an estimate. It applies your chosen slab rate and the 10% TDS but does not add surcharge (for high incomes) or the 4% health and education cess, nor any deductions. Confirm your final position when filing your return.

India Dividend Tax Calculator

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This India dividend tax calculator shows what you actually keep from a dividend. Since dividends are now taxed in the shareholder’s hands at slab rates, it applies your marginal rate to the gross dividend, accounts for the 10% TDS withheld above ₹5,000, and gives your net take-home after the TDS credit.

How it works

Dividends are added to your income and taxed at your slab:

income tax on dividend = gross dividend × slab rate %

Separately, the payer deducts TDS at the point of payment:

TDS = 10% × gross dividend — only if total dividends from that payer exceed ₹5,000 in the year, otherwise nil.

TDS is not an extra tax — it is a prepayment. So your net dividend is the gross minus your full slab-rate tax, and the tool also shows how much of that tax was already collected via TDS (the rest is paid, or refunded, at filing).

Example

A ₹50,000 dividend for a 30% slab investor: slab-rate tax is ₹15,000, leaving a net dividend of ₹35,000. Because the dividend exceeds ₹5,000, the company deducts ₹5,000 TDS at source (10%), which is credited against the ₹15,000, leaving ₹10,000 to pay at filing.

Notes

This is an estimate. It excludes surcharge for high incomes and the 4% health and education cess, and assumes a resident shareholder. Investors below the taxable limit can file Form 15G/15H to avoid TDS. Confirm your final liability when filing.