What is the tax on dividends and interest?

ANY income that does not fall under the four heads of income, namely salaries, business or profession, house property or capital gains will fall under the 'other income' head.

So, dividends (from shares and mutual funds) and interest (from bank deposits, postal schemes and other debt products) fall under this head.

All the taxable income from this head is added to your total income and tax is calculated at your regular tax slabs.


Dividends

Instrument	Taxation
Equity shares	Tax free
Equity mutual funds	Tax free
Debt mutual funds	Tax free

 

 

Interest

Instrument	Taxation
Bank deposits	Taxable
Public Provident Fund (PPF)	Tax-free
Postal schemes other than PPF	Taxable
Bonds and debentures	Taxable

 

 

 

 

 

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