Under Section 194 of the Income Tax Act, 1961, Tax Deducted at Source (TDS) @ 10% is applicable on dividends paid to shareholders. A TDS of 10% will be deducted from dividends above ₹5000.
However, the TDS rates can be different in the following scenarios:
TDS of 20% will be applicable If the registrar (RTA) of the company doesn't have the PAN details of the investor in its records.
TDS of 20% will be applicable for all non-resident shareholders.
If form 15G or 15H is filed with the company, TDS is deducted at a lower/NIL rate.