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      09 Jul 2025 TCS Launches ‘Gen AI Tech Pathway’ in its STEM Education Program goIT
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      01 Jul 2025 TCS Recognized as a Leader in Pharmacovigilance Operations Services by Everest Group
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    • Perpetually Adaptive Enterprise Press tab for submenu items

      Where adaptability meets advantage

      At TCS, we don’t just help businesses transform. We help them become perpetually adaptive enterprises, built to evolve continuously and confidently in a world of constant change.

      Adaptability starts here
    • Industries
      • Banking
      • Capital Markets
      • Consumer Packaged Goods and Distribution
      • Communications, Media, and Information Services
      • Education
      • Energy, Resources, and Utilities
      • Healthcare
      • High Tech
      • Insurance
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      • Artificial Intelligence and Data & Analytics
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      • Cognitive Business Operations
      • Consulting
      • Cybersecurity
      • Enterprise Solutions
      • IoT and Digital Engineering
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    • Products and Platforms
      • TCS ADD™
      • TCS BANCS™
      • TCS BFSI Platforms
      • TCS CHROMA™
      • TCS Customer Intelligence & Insights™
      • TCS ERP on Cloud
      • ignio™
      • TCS iON™
      • TCS HOBS™
      • TCS Intelligent Urban Exchange™
      • TCS OmniStore™
      • TCS Optumera™
      • TCS Tap™
      • Quartz™ – The Smart Ledgers™
      • TCS TwinX™
      • TCS MasterCraft™
      • Jile™
      • TCS DigiBOLT™
      • TCS AI WisdomNext™
    Overview
  • Industries expand here
    • Banking
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    • Cloud
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  • Products and Platforms expand here
    • TCS ADD™
    • TCS BANCS™
    • TCS BFSI Platforms
    • TCS CHROMA™
    • TCS Customer Intelligence & Insights™
    • TCS ERP on Cloud
    • ignio™
    • TCS iON™
    • TCS HOBS™
    • TCS Intelligent Urban Exchange™
    • TCS OmniStore™
    • TCS Optumera™
    • TCS Tap™
    • Quartz™ – The Smart Ledgers™
    • TCS TwinX™
    • TCS MasterCraft™
    • Jile™
    • TCS DigiBOLT™
    • TCS AI WisdomNext™
  • Who we are
    • Our Brand Press tab for submenu items

      With you for the long run

      Whether it’s running a marathon or helping businesses thrive in applying new technology innovations at scale, we understand what it takes to keep pushing the limits of what’s possible.

      Discover our brand
    • About Us
      • Leadership
      • Corporate Sustainability
      • Diversity, Equity, and Inclusion
      • Corporate Social Responsibility
      • The TCS Way
      • Alliances
    • Research & Innovation
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      • TCS Pace™
    Overview
  • About Us expand here
    • Leadership
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  • Research & Innovation expand here
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  • Insights
    • Global Studies Press tab for submenu items

      Our Thought Leadership Institute

      Through studies, reports and points of view, we deliver forward-looking, practical insights on key issues at the intersection of business and tech.

      Discover Expert Insights
    • Customer Stories
    • Perspectives
    Overview
  • Customer Stories
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  • Careers
    • Build a future with us Press tab for submenu items

      Want to be a global change-maker? Join our team.

      At TCS, we believe exceptional work begins with hiring, celebrating and nurturing the best people — from all walks of life.

      Join us
    • India
      • India
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      • Argentina
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      • Canada
      • Chile
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    Overview
  • India expand here
    • India
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    • Argentina
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    • USA
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    • Australia
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    • Newsroom Press tab for submenu items

      Find the latest news about TCS in our Newsroom

      Get access to a catalog of the latest news stories from across TCS. Discover our press releases, reports, and company announcements.

      Discover more
    • Press releases

      Recent Press releases

      17 Jul 2025 TCS Ranked Among Top 20 Global Technology Brands in Brand Finance Tech 100 2025 List
      15 Jul 2025 TCS & MIT Sloan Management Review Launch New Research Series; Unveil Roadmap for Human-AI collaboration in Enterprises
      10 Jul 2025 Robust Order Book and Operational Resilience mark TCS’ Q1
      View all
    • News alerts

      Recent News

      16 Jul 2025 TCS Launches AI-Powered Research & Innovation Centre in Singapore to Accelerate Enterprise Innovation at Scale
      09 Jul 2025 TCS Launches ‘Gen AI Tech Pathway’ in its STEM Education Program goIT
      03 Jul 2025 TCS Unveils the 2025 Edition of TCS InQuizitive Across 12 Indian Cities, To Spotlight India’s Brightest Young Minds
      View all
    • Analyst recognition

      Recent recognitions

      17 Jul 2025 TCS a Leader in Life and Annuities Insurance BPS and Third-Party Administrator Services: Everest Group
      15 Jul 2025 TCS Recognized as a Leader in Healthcare Provider Digital Services by Everest Group
      01 Jul 2025 TCS Recognized as a Leader in Pharmacovigilance Operations Services by Everest Group
      View all
    • Events

      Upcoming events

      29 Sep 2025 TCS BaNCS at SIBOS 2025, Frankfurt
      22 Sep 2025 TCS Life Sciences Forum 2025 London
      20 Aug 2025 TCS at AWS Summit Johannesburg 2025
      View all
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    • Overview Press tab for submenu items

      TCS works hand in hand with world-leading investors.

      Tata Consultancy Services Limited
      NSE:TCS
      INR
      Discover more Q1FY26 Debrief
    • Management Commentary
      • Latest Quarter Commentary
      • Annual Report Section
    • Financials
      • Quarterly Earnings Reports
      • Download TCS Data Sheet
      • Erstwhile CMC Financials
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    Overview
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      Discover more
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    • Investor Relations
    • IR Key Events

    Taxation of Dividend Distribution in India

    April 1, 2020

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    Event Details

    The Income Tax Act, 1961 (Act), as amended by the Finance Act 2020, mandates that dividends paid or distributed by Indian Companies on or after April 1, 2020 would be taxable in the hands of shareholders. As per the new provisions, Indian company is required to deduct the applicable tax at source under various sections of the Income Tax Act, 1961 (Act). 

    Dividend payment to resident shareholders is subject to a withholding tax of 10% provided the shareholder has updated his PAN with the depository or the Company as the case may be. Otherwise, the TDS rate would be 20%. However, there is no withholding tax, if the dividend paid to a resident individual shareholder does not exceed Rs. 5,000 in the fiscal year.

    Dividend payment to non-resident shareholder {including Foreign Institutional Investors (FIIs)/ Foreign Portfolio Investors (FPIs)} is liable for withholding tax at a rate of 20% (plus applicable surcharge and cess). A lower rate for withholding may apply if the benefit of tax treaty is available to the shareholders.

    Section 206AB of the Act

    The newly introduced provisions section 206AB of the Income Tax Act, 1961 is applicable with effect from 1 July 2021, which provides for higher deduction of tax at source for non-filers of income-tax return, whereby tax has to be deducted at the higher of the following rates, namely-

    (i)  at twice the rate specified in the relevant provision of the Act; or

    (ii)  at twice the rate or rates in force; or

    (iii)  at the rate of five per cent.

    Where sections 206AA and 206AB are applicable simultaneously i.e. the specified person has not submitted the PAN as well as not filed returns; the tax shall be deducted at the higher of the two rates prescribed in these two sections. 
    The term ‘specified person’ is defined in sub section (3) of section 206AB of the Act who satisfies the following conditions:

    • A person who has not filed the income tax return for the previous year immediately prior to the previous year in which tax is required to be deducted, for which the time limit of filing of return of income under section 139(1) of the Act has expired; and
    • The aggregate of TDS and TCS in his case is ₹50,000 or more in the said previous year.

    The non-resident who does not have the permanent establishment in India is excluded from the scope of a specified person.

    Please refer to the Investor FAQs section of this website for questions on tax deduction at source on dividend distributed to shareholders and also for downloading the forms related to exemption from deduction of tax. The company has compiled this FAQ exercising due care and diligence, for the convenience of the shareholders. However, shareholders are encouraged to seek appropriate professional advice as pertinent to their specific circumstances and act accordingly.

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