Suresh

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Dividend which is taxed in the hands of the company at the time of distribution will not be subject to tax in your hands at the time when you receive it. The same will be exempt under Section 10(34). All domestic companies will have to pay tax on distributed profits unless the dividend is of the nature referred to in Section 2(22)(e). Section 2(22)(e) refers to a loan taken by certain persons from a closely held company being deemed as dividend.

On the sale of bonus shares or on the sale of shares purchased by you and held for more than one year, there will be no tax payable if securities transaction tax has been suffered at the time of sale of the shares.

Securities transaction tax will be payable when the sale is through a recognised stock exchange. If securities transaction tax is not paid on sale, tax will be charged on the long-term capital gains in accordance with Section 112.

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