Tax on Dividend income of shares: How can investors minimise money loss? Expert explains

Dividend income is taxable, and tax may be deducted at source above a specified threshold. Investors can consider growth-oriented investments, where returns are taxed as capital gains when sold, and should avoid borrowing to invest for tax benefits.

Dividend delights everyone, but it also comes with a disclaimer of taxation. When a company distributes a portion of its profit among shareholders, the dividend income is taxable in the hands of investors. Tax deducted at source (TDS) is also applied if the payout exceeds a fixed threshold. For those who often end up paying taxes on their dividend, here are all the details to know about how to legally minimise tax burden on the payout.

How to reduce tax burden on dividend income?

Compare the tax treatment of dividend income with that of capital gains to understand scope to minimise taxation on dividend income, investors can also consider reinvestment and growth option, according to Anita Basrur Partner Direct Tax at Sudit K Parekh & Co LLP.