You received less dividend than the declared amount because companies deduct Tax Deducted at Source (TDS) before crediting the dividend to your account. This TDS amount is deposited with the government as an advance tax payment on your behalf.
How TDS affects your dividend
Companies must deduct tax at source before paying dividends to shareholders in India. The TDS rate depends on your investor category and whether you have provided your PAN details.
TDS rates for different investor categories
| Category | Previous threshold | New threshold (FY 25-26) | TDS Rate | Special conditions |
| Resident Individuals | ₹5,000 | ₹10,000 | 10% | 20% if PAN is not provided |
| HUFs | ₹5,000 | Nil | 10% | 20% if PAN is not provided |
| Non-Resident Individuals (NRIs) | Nil | Nil | 20% | Plus applicable surcharge and cess |
| Corporates, LLP, Trusts etc | Nil | Nil | 20% | Plus applicable surcharge and cess |
Example scenario
-
Resident with PAN (Dividend below threshold)
- Shares owned: 100
- Dividend declared: ₹50 per share
- Total dividend: ₹5,000
- TDS deducted: ₹0 (below ₹10,000 threshold)
- Amount received: ₹5,000
-
Resident with PAN (Dividend above threshold)
- Shares owned: 500
- Dividend declared: ₹30 per share
- Total dividend: ₹15,000
- TDS deducted: ₹1,500 (10% of ₹15,000)
- Amount received: ₹13,500
-
Resident without PAN (Dividend above threshold)
-
Shares owned: 500
- Dividend declared: ₹30 per share
- Total dividend: ₹15,000
- TDS deducted: ₹3,000 (20% of ₹15,000 due to no PAN)
- Amount received: ₹12,000
-
Shares owned: 500
-
NRI investor
- Shares owned: 100
-
Dividend declared: ₹30 per share
- Total dividend: ₹3,000
- TDS deducted: ₹600 (20% of ₹3,000)
- Amount received: ₹2,400
Things to keep in mind
- The TDS paid on dividends is part of the tax paid for the financial year. This can be verified in Form 26AS, available on the income tax portal. To learn more about Form 26AS, visit contents.tdscpc.gov.in/en/form26AS-introduction.
- Senior citizens or individuals whose total income is below the taxable limit can submit Form 15G / 15H to avoid a TDS deduction.
- When filing your income tax return, you can claim credit for TDS deducted on dividends.
- All dividend payments to non-individual resident shareholders are subject to Tax Deducted at Source (TDS) without any minimum threshold exemption. The TDS rate is 10% when a valid Permanent Account Number (PAN) is registered with the company or its depository/Registrar and Transfer Agent (RTA), and increases to 20% if PAN details are not provided or are invalid. This tax deduction applies to the entire dividend amount regardless of the payment value.