{"id":38499,"date":"2023-01-24T15:53:20","date_gmt":"2023-01-24T10:23:20","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?p=38499"},"modified":"2023-01-24T15:53:26","modified_gmt":"2023-01-24T10:23:26","slug":"what-is-taxability-of-dividend-income-from-stocks","status":"publish","type":"post","link":"https:\/\/www.5paisa.com\/finschool\/what-is-taxability-of-dividend-income-from-stocks\/","title":{"rendered":"What is Taxability of Dividend Income From Stocks?"},"content":{"rendered":"\t\t
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\u201cThe beauty of Dividends is that you get paid, whether or not the market is up\u201d<\/b><\/span><\/p>

Dividend Investing is one of best investing strategy. Dividend stocks have outperformed with less volatility. Dividend stocks provide two sources of returns one is regular income from dividend payments and other is capital appreciation of the stock price. This total returns can increase over a period of time. Because of the lower volatility, stocks with dividend often attracts investors who has lower risk taking capacity.<\/p>

But are the incomes received through dividends taxable?<\/strong><\/span><\/p>

Before we discuss this topic Let us understand which is dividend?<\/strong><\/span><\/h2>

MEANING OF DIVIDEND<\/strong><\/span><\/h2>

\"\"<\/a><\/p>

Dividend is either a portion of a company\u2019s profits or it is taken from the reserves as part of an agreement which is between company and shareholders. The word Dividend comes from the word \u201cdividendum\u201d which means total divisible sum.\u00a0 Dividend is declared by the company\u2019s board of directors and after the approval from the shareholder. Dividends are often distributed on quarterly basis and it can be paid out in the form of cash or in the form of reinvestment in additional stocks.<\/p>

NOW LET US UNDERSTAND THE SOURCES OF DIVIDEND<\/strong><\/span><\/h2>
  1. Current Year Profit<\/li>
  2. Past Profit remaining undistributed<\/li>
  3. Money provided by Government<\/li><\/ol>

    LET US UNDERSTAND EACH SOURCE IN DETAIL<\/strong><\/span><\/p>

    1. Dividends out of current year profits: <\/strong><\/span>Any company who declares dividend out of current year profits has to meet all the below mentioned requirements:<\/li><\/ol>