Section 10(34) of Income Tax Act, 1961

Section 10(34) of Income-tax Act, 1961

Dividend Income which do not form part of Total Income

According to Section 10(34), following income shall not become the part of Total Income while calculating Income Tax liability

  • any income by way of dividends referred to in section 115-O :

    Provided that nothing in this clause shall apply to any income by way of dividend chargeable to tax in accordance with the provisions of section 115BBDA :

    Provided further that w.e.f 01.04.2021 nothing contained in this clause shall apply to any income by way of dividend received on or after the 1st day of April, 2020 other than the dividend on which tax under section 115-O and section 115BBDA, wherever applicable, has been paid;

Thus, till Assessment Year 2020-21, if a shareholder gets dividend from a domestic company then he shall not be liable to pay any tax on such dividend as it is exempt from tax under section 10(34) of the Act. However, in such cases, the domestic company is liable to pay a Dividend Distribution Tax (DDT) under section 115-O.

But Finance Act, 2020 has abolished the DDT, and now dividends are taxed in the hands of the investors.

For more details on Taxation on Dividend Income, visit here: www.deepgyan.com/tax-on-dividend-income/

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