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Dividends are Tax Free

Are there any tax-related benefits with regard to dividends from equity-oriented schemes for a retail investor vis-à-vis a corporate investor? Please explain.

Are there any tax-related benefits with regard to dividends from equity-oriented schemes for a retail investor vis-à-vis a corporate investor? Please explain.
-Jegan Cherian

As regards dividend from equity-oriented schemes, there have been no changes in the existing tax provisions. Currently, dividends from equity-oriented schemes, unlike those from debt-oriented schemes, are not taxable either at the point of distribution by the AMC or in the hands of the investor. Moreover, this provision is equally applicable both for individuals as well as corporates.

In other words, any dividend that you receive from an equity-oriented scheme can go straight into your bank account. It's important to note how the distinction is made between investments from an individual and those from a corporate. The only distinguishing factor is the name of the entity in whose name the units have been bought. If it is in the name of an individual or HUF, then the investment is treated as that from a retail investor. All other entities are treated as corporate, which includes trusts, non-profit organisations and limited companies.

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