Section 8 of ITA, 1961 : Section 8: Dividend Income

Explanation using Example

Imagine Mr. Sharma owns shares in ABC Ltd. In the financial year 2022-23, ABC Ltd announces a final dividend in September and it is paid to shareholders in October. According to Section 8 of the Income-tax Act, 1961, this dividend is considered income for Mr. Sharma in the year it was declared, which is 2022-23, even though he received the payment in the next month.

In another scenario, if ABC Ltd. also declared an interim dividend in January 2023 and made it available to its shareholders immediately, Mr. Sharma would have to include this interim dividend in his total income for the financial year 2022-23, as it was unconditionally made available to him in that year.