TDS on Dividend Payment – If you are an investor in the stock markets, then you must know this. From the new financial year, this is going to change for you. You will be paying more as dividend payout. From April 1, 2021, Tax Deducted at Source (TDS) cut by the company will be 10 per cent instead of the current TDS of 7.5 per cent. 

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In the aftermath of the Coronavirus Pandemic the Narendra Modi Government had reduced the TDS from 10 per cent to 7.5 per cent so that the tax payers are less burdened and they have more money in their hands.

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Personal Finance Expert Jitendra Solanki said that the change will be effective from the new financial year and the investors will be paying the TDS of 10 per cent. It will be same as they were paying before the pandemic.      

Things to know about Dividend pay-outs: 

There is no tax slab for dividend payment, and it is tagged along with your personal income. 

Tax liability on your Dividend will be calculated after adding the Dividend income to your personal income and whatever slab your total income falls in. For example, if your income is 5.5 lakhs and you have received Rs 50,000 as Dividend payment after deduction, then your income will be Rs 6 lakhs. The income tax rate applied for this slab is 20 per cent. Which means you will have to pay income tax in Rs 5-10 lakh slab. 

At the time of filing of your ITR, when your tax liability is being calculated, you can attach the TDS receipt to get tax benefits since you have already paid tax for this at the source i.e. the company has deducted at the time of dividend pay-out.

If a company is giving you a dividend less than 5000, then no TDS is deducted by the company.