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TDS on Dividend

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kumar manoj

manager (finance)

119 Points Posted on 08 March 2021

after insertion of sec 194 my domestic compant has paid dividend to its shareholder including its elegible employees whose equity share had been issued under ESOS. my question is being an employee dividend income will be taxed under 192 or separetly taxed under section 194.

Replies (2)

Quick Summary

This discussion clarifies the tax treatment of dividends paid to employees who received shares under an Employee Stock Option Scheme (ESOS). The core question is whether such dividend income falls under Section 192 (salary income) or Section 194 (dividend income) for Tax Deducted at Source (TDS) purposes. The consensus is that since the dividend is paid to all shareholders, including employees, and there's no employer-employee relationship specifically for this income, it should be treated as normal dividend income subject to TDS under Section 194, not Section 192.

Naveen

student

334 Points Posted on 08 March 2021

Shares alone were allotted to them under ESOP basis. But dividend here was paid to all the share holders. There is no Employer and employee relationship for the dividend received by Employee. Along with other shareholders, employees also received. So it should be considered as normal Dividend and comes under 194 but not 192.