Question

What is the maximum limit available in respect of dividend under section 194 of the Income Tax Act, 1961, for the assessment year 2018-19 on which no TDS is required to be deducted?
1. Rs. 2,500
2. Rs. 3,000
3. Rs. 5,000
4. Rs. 10,000

Answer 1

Correct Answer - Option 1 : Rs. 2,500

The correct answer is ₹2,500

•  TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at the source if the payment exceeds certain threshold limits.
• TDS under section 194: If the amount of dividend exceeds ₹2,500, TDS @10% (20% in case of no valid PAN) is required to be deducted.