How much dividend income is tax free?
Dividend income in India is fully taxable since FY 2020‑21. Earlier exemptions under Section 10(34) were removed after the abolition of DDT. Now, all dividends are taxed at the investor’s slab rate, though TDS applies above ₹5,000. Effectively, there’s no tax‑free dividend limit for individuals.
For individual investors in India, there is effectively no general “tax‑free” limit on dividend income now – the entire dividend amount is taxable in your hands at your normal slab rate from FY 2020‑21 onwards.
Earlier, dividend from Indian companies was exempt under section 10(34), subject to conditions and limits, but that exemption has been removed after abolition of Dividend Distribution Tax. Now:
All dividend you receive (shares or equity mutual funds) is added under “Income from Other Sources” and taxed as per slab.
TDS of 10% is deducted if your dividend from a payer exceeds ₹5,000 (or ₹10,000 in some cases), but this is only advance tax, not an exemption.
So, from a practical exam/ITR point of view, “tax‑free dividend limit” is nil for current years; the only reliefs are slab rates, basic exemption limit, and specific DTAA benefits for NRIs/foreign dividends.