Is TDS applicable on dividend income received by resident individuals?

TDS for resident individuals is charged at 10% on dividends earned in excess of Rs. 5,000 from a company or mutual fund. The TDS will appear on Form 26AS and will be available as a credit against the total tax liability in your Income Tax Return (ITR).

For example, Mr. Ram is eligible to receive Rs.10,000 as dividends from Tata Steel. Since the dividend amount exceeds the limit of Rs. 5,000, Tata Steel will:
  • Deduct TDS @ 10%, i.e., Rs. 1,000. 
  • Mr. Ram will receive Rs. 9,000 as dividend income. This will have to be added to his total income and taxed as per the income tax slab he falls under for the financial year.

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