37.1 Dividend paid by companies is normally exempt from taxation. Finance Act 2016 provided that dividend earned above Rs. 10,00,000 by a resident individual, HUF or a firm is taxable at the rate of 10%. Non-residents and other persons were exempt from this tax.
37.2 Finance Bill 2017 proposes to extend the applicability of this section to all types of resident assessees. However following persons continue to be exempt completely:
i) a domestic company; or
ii) a fund, an institution, a trust, which undertakes activities like education, medical, hospital etc. [S. 10(23C)]; or
iii) a charitable trust or institution registered with tax department [S. 12AA]