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TDS on Dividend – Section 194

The principal officer of an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends within India is liable to deduct tax at source on dividends.

Tax is to be deducted at the time of credit of such amount to account of payee or at the time of payment whichever is earlier.

Tax is to be deducted at the rate of 10%. If the recipient of income doesn’t furnish his PAN to deductor then TDS is to be deducted @ 20%.

Assessee can apply to assessing officer for no TDS or TDS at lower rate under Section 197.

TDS is not required to be deducted if

  1. Dividend covered by section 115-O
  2. Declaration is made in form 15G or 15H
  3. Amount of dividend paid or is likely to paid in a financial year to a shareholder doesn’t exceed Rs. 2,500 and such amount is paid by account payee cheque.
  4. Any dividend payable to LIC, GIC or its subsidiaries or any other insurer in respect of shares owned by them or in which they have full beneficial interest

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3 comments

  1. Worthy reading. Thank you!

  2. Dear sir,My Client is Individual Tax Payer, He has paid tds on property, demand raised because of late payment, SO,i Downloaded Justification report, so, what is the password to extract ZIP file for Individual Justification report(26QB).zip file name is ‘JR_26QB_AC8465240’

    Regards,
    Vijay.

    • Rohit Pithisaria

      The password for opening justification report is ‘JR__

      __‘, e.g., JR_AAAAA1235A_24Q_Q3_2010-11.

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