An Indian company must deduct TDS at 10% under Section 194 on dividend paid to a resident shareholder once the dividend exceeds Rs10,000 in a financial year from that company — the threshold was raised from Rs5,000 to Rs10,000 by Budget 2025 (effective 1 April 2025). Section 194K applies the same 10% / Rs10,000 rule to mutual-fund dividend (IDCW) payouts. If PAN is not furnished, TDS is 20% under Section 206AA. NRIs are taxed under Section 195 / 196A (20% plus surcharge and cess) or the lower DTAA rate. You claim the deducted TDS as credit in your ITR via Form 26AS / AIS.
Dividend TDS — Rates & Thresholds
The TDS rate and threshold on dividend income for every payee type for FY 2025-26. TDS is on the gross dividend before tax, at the time of payment or credit, whichever is earlier. See the full TDS rate chart 2025-26.
| Payee / scenario | Section | TDS Rate | Threshold (per payer/FY) |
|---|---|---|---|
| Resident shareholder — company dividend | 194 | 10% | Rs10,000 |
| Resident investor — mutual-fund IDCW | 194K | 10% | Rs10,000 |
| Shareholder / investor without PAN | 206AA | 20% | — |
| Form 15G / 15H submitted (income below limit) | 194 / 194K | Nil | — |
| NRI — company dividend | 195 | 20%* | — |
| NRI — mutual-fund dividend | 196A | 20%* | — |
* Plus surcharge and cess, or the lower DTAA rate (typically 5-15%) if the NRI furnishes a valid TRC + Form 10F. Thresholds were raised from Rs5,000 to Rs10,000 by Budget 2025 (eff. 1 Apr 2025).
The Rs10,000 limit applies separately to each company or fund. You can receive Rs9,000 dividend from five different companies — Rs45,000 in total — with no TDS deducted, because no single payer crosses Rs10,000. But the whole Rs45,000 is still fully taxable in your ITR under "Income from Other Sources".
Company Dividend vs Mutual-Fund Dividend
Both provisions deduct 10% at the same Rs10,000 threshold, but the deductor and the covered income differ. Section 194K covers only mutual-fund dividend / IDCW payouts — it does not apply to capital gains on redemption, SWP or growth-plan units.
Company Dividend
- Deducted by the company / its registrar (RTA)
- 10% on dividend over Rs10,000 per company per FY
- Appears in 26AS & AIS as TDS u/s 194
- Covers equity-share dividend of Indian companies
Mutual-Fund Dividend (IDCW)
- Deducted by the AMC / fund house
- 10% on IDCW over Rs10,000 per fund per FY
- Appears in 26AS & AIS as TDS u/s 194K
- Only dividend / IDCW — not redemption capital gains
10% Company dividend — Rs40,000
20% Same dividend, no PAN
The higher-rate TDS on non-filers of income-tax returns under Section 206AB was omitted with effect from 1 April 2025 by the Finance Act 2025. Companies and AMCs no longer run a return-filing check before deducting dividend TDS; only the missing-PAN 20% rate under Section 206AA survives. Keep your PAN linked with the depository (NSDL / CDSL) and your AMC folio to avoid the 20% cut.
Excess dividend TDS deducted? Get it recovered as a refund in your ITR.
File Your ITR →How to Avoid or Reduce Dividend TDS
If your total income for the year is below the basic exemption limit, you can stop the deduction by filing a self-declaration with the company or AMC before the dividend is paid.
- Form 15G — for a resident individual / HUF below 60 whose total income and total tax are nil.
- Form 15H — for a resident senior citizen (60+) whose final tax on estimated income is nil.
- The declaration needs a valid PAN — without it, TDS is 20% under Section 206AA regardless of income.
- File it at the start of the financial year and with each RTA / AMC where you hold units or shares.
Dividend TDS in Your ITR
Dividend income is taxed at your slab rate. Report the gross dividend (before TDS) under "Income from Other Sources" and claim the deducted TDS as credit — it flows in from your Form 26AS and AIS.
- Keep PAN updated with depository (NSDL/CDSL) & AMC
- Submit Form 15G/15H before dividend date if eligible
- Match TDS in 26AS with dividend statements
- Report gross (pre-TDS) dividend in ITR
- Claim TDS credit against total tax
- Flag mismatches to the deductor for correction
Want your dividend TDS matched and refund maximised?
File ITR with a CA →Dividend TDS for NRIs & DTAA Relief
For non-resident shareholders, company dividend is taxed under Section 195 and mutual-fund dividend under Section 196A, generally at 20% plus surcharge and cess. This drops to the lower DTAA rate (typically 5-15%) if the NRI furnishes a valid Tax Residency Certificate (TRC) and Form 10F before the payout. See our DTAA relief and NRI taxation guides.
| Country of residence | DTAA dividend rate | Typical condition |
|---|---|---|
| USA | 15% | Standard treaty rate |
| UK | 15% | Standard treaty rate |
| UAE | 10% | Lower rate for UAE residents |
| Singapore | 10% / 15% | Depends on shareholding |
| Mauritius | 5% / 15% | 5% if holding > 10% shares |
| No DTAA / documents not filed | 20% + SC + cess | Domestic rate u/s 195 / 196A |
DTAA relief must be claimed proactively with TRC + Form 10F before dividend payment; excess TDS is recoverable by filing an Indian ITR.
An NRI who does not submit a valid TRC and Form 10F before the dividend date has TDS deducted at the full domestic rate (20% plus surcharge and cess), not the treaty rate. The excess over the DTAA rate can only be recovered later by filing an income-tax return in India — so file the documents in advance.
TDS on Dividend — Frequently Asked Questions
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Dividend TDS — ITR Filing & Refund Claims
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