What is Dividend Taxation in India?
Dividends in India are taxed as income in the hands of the investor at their applicable slab rate — making high-dividend strategies less tax-efficient for high earners.
Formula
Dividend Tax = Dividend Received × Applicable Income Tax Slab Rate
How to Interpret
For investors in the 30% tax bracket, dividend income is significantly eroded by taxes. This makes growth-oriented investing more tax-efficient.
Typical Ranges
Taxed at slab rate (5-30%). 10% TDS if dividends exceed ₹5,000/year from a single company.