Section 8 of the Income Tax Act, 1961 – Dividend income

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Section 8 of the Income Tax Act, 1961 contains provisions regarding ‘dividend income’. When you invest in a business, as an investor, you anticipate receiving a return on your money. An entity uses the money invested in it to develop and grow its company and increase earnings. The investors who had put money into the organisation are given a share of the earnings that it makes. One of the types of returns is dividend.

As per section 8 the following are considered as income of the previous year:

1. Any dividend declared, distributed or paid by a company within the scope of sub-clauses (a), (b), (c), (d) and (e) of Section 2 (22) in the year it is declared, distributed or paid.

2. Any interim dividend in the year it is unconditionally made available by a company to the member entitled to it.