{"id":1609,"date":"2025-02-26T11:30:39","date_gmt":"2025-02-26T06:00:39","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=1609"},"modified":"2025-06-26T15:55:48","modified_gmt":"2025-06-26T10:25:48","slug":"section-194","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/section-194\/","title":{"rendered":"Section 194: TDS on Dividends Latest Rules &amp; Rates"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"538\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/section-194-of-the-Income-Tax-Act-1024x538.png\" alt=\"\" class=\"wp-image-1610\" srcset=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/section-194-of-the-Income-Tax-Act-1024x538.png 1024w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/section-194-of-the-Income-Tax-Act-300x158.png 300w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/section-194-of-the-Income-Tax-Act-768x403.png 768w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/section-194-of-the-Income-Tax-Act.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>According to section 194 of the Income Tax Act, the principal officer of an Indian company must deduct tax at source from any dividend declared and paid to residents before disbursing the payment. This tax deduction applies specifically to dividends on equity shares.<\/p>\n\n\n\n<p>According to Section 194, Tax Deducted at Source (TDS) must be deducted at a rate of 10% if the total dividend income of the receiving shareholder exceeds \u20b95,000 in a given year. The tax deduction must be made at the time of payment or when the credit is applied, whichever occurs first.<\/p>\n\n\n\n<p>TDS at 20% must be deducted from shareholders without PAN.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Increased_Threshold_Limit\" >Increased Threshold Limit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Applicability\" >Applicability<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Deductor\" >Deductor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Deductee\" >Deductee<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#TDS_Rate\" >TDS Rate<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Standard_Rate\" >Standard Rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Non-PAN_Holders\" >Non-PAN Holders<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Exceptions\" >Exceptions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Declaration_for_non-deduction\" >Declaration for non-deduction<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Form_15G15H\" >Form 15G\/15H<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#Example\" >Example<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Increased_Threshold_Limit\"><\/span>Increased Threshold Limit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The limit for TDS deduction on dividend income has been increased from \u20b95,000 to \u20b910,000. As a result, companies must now deduct TDS at a rate of 10% only when the total dividend paid to a resident shareholder surpasses \u20b910,000 in a financial year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Applicability\"><\/span>Applicability<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deductor\"><\/span>Deductor<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Any domestic company distributing dividends to its resident shareholders.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deductee\"><\/span>Deductee<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Shareholders who are residents and receive dividend income from equity shares.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_Rate\"><\/span>TDS Rate<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Standard_Rate\"><\/span>Standard Rate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A tax rate of 10% applies to dividend amounts that exceed \u20b910,000 in a financial year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non-PAN_Holders\"><\/span>Non-PAN Holders<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If a shareholder has not provided their Permanent Account Number (PAN), TDS will be deducted at a rate of 20%.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exceptions\"><\/span>Exceptions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Dividend Amount:<\/strong> No TDS is deducted if dividends are paid in modes other than cash, and the total dividends do not exceed \u20b910,000 in a financial year.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Specific Entities: <\/strong>TDS provisions do not apply to dividends credited or paid to entities such as the Life Insurance Corporation (LIC), the General Insurance Corporation (GIC), and any other insurer regarding shares owned or beneficially held by them.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Declaration_for_non-deduction\"><\/span>Declaration for non-deduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Form_15G15H\"><\/span>Form 15G\/15H<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Shareholders whose total income falls below the taxable limit can submit <strong><a href=\"https:\/\/www.caclubindia.com\/articles\/form-15g-and-form-15h-save-tds-on-interest-income-49598.asp\">Form 15G<\/a><\/strong> (for individuals below 60 years) or <strong><a href=\"https:\/\/www.caclubindia.com\/articles\/form-15g-and-form-15h-save-tds-on-interest-income-49598.asp\">Form 15H<\/a><\/strong> (for senior citizens) to the company.<\/p>\n\n\n\n<p>This declaration confirms that their income is below the taxable threshold, allowing them to avoid the deduction of TDS on their dividend income.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Example\"><\/span>Example<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If a resident individual receives a dividend of \u20b910,000 from a company:<\/p>\n\n\n\n<p>TDS @ 10% = \u20b91,000 (if PAN is provided).<\/p>\n\n\n\n<p>Net amount received = \u20b99,000.<\/p>\n\n\n\n<p>The recipient must include the gross dividend (\u20b910,000) in their taxable income and can claim credit for the TDS deducted.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1740546798949\"><strong class=\"schema-faq-question\">Does Section 194 apply to non-residents?<\/strong> <p class=\"schema-faq-answer\">No, Section 194 applies only to resident recipients. For non-residents, TDS on dividends is governed by Section 195, and the rate may vary based on Double Taxation Avoidance Agreements (DTAAs).<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1740546831978\"><strong class=\"schema-faq-question\">How can I claim credit for TDS deducted on dividends?<\/strong> <p class=\"schema-faq-answer\">The TDS amount is reflected in your Form 26AS or AIS (Annual Information Statement). You can claim credit for the TDS while filing your income tax return by including the gross dividend amount in your taxable income.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1740546942867\"><strong class=\"schema-faq-question\">Are there any exemptions from TDS on dividends?<\/strong> <p class=\"schema-faq-answer\">Yes, dividends covered under Section 10(34) (exempt income) are not subject to TDS.<br\/>Additionally, certain entities like LIC, GIC, or other specified institutions may be exempt from TDS under specific conditions.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1740546955186\"><strong class=\"schema-faq-question\">What is the due date for depositing TDS under Section 194?<\/strong> <p class=\"schema-faq-answer\">The deductor (company or mutual fund) must deposit the TDS with the government:<br\/>By the 7th of the following month (if TDS is deducted in March, the due date is April 30).<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>According to section 194 of the Income Tax Act, the principal officer of an Indian company must deduct tax at [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":1610,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1609","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\r\n<title>Section 194: TDS on Dividends Latest Rules &amp; 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