Microlesson · 5-min read

Dividend Income Deemed to Accrue or Arise in India [Sec 9(1)(iv)]

## Dividend Paid by an Indian Company [Section 9(1)(iv)]

Dividend paid by an Indian company outside India to any person is always deemed to accrue or arise in India.

### Key Principle

Where the payer is an Indian company, dividend is taxable in India.
Place of declaration / payment / receipt is irrelevant.
Recipient's residential status is irrelevant for the purpose of source determination.

### Quick Reference

Payer Company	Place of Payment	Recipient	Deemed to Accrue in India?
Indian Co.	Outside India	NR	YES
Indian Co.	Outside India	Resident	YES
Foreign Co.	Outside India	NR	NO
Foreign Co.	In India	NR	YES (received in India)

Worked example

### Example 1

Example: Reliance Industries Ltd. (Indian Co.) declares dividend and pays it to a US shareholder in his US bank account.

Solution: Indian Co. paying dividend → Deemed to accrue/arise in India → Taxable in India in the hands of the US shareholder (NR).

Treating dividend from a foreign company as taxable for NR just because shares are held — it isn't unless income is received in India.
Forgetting that even payments made outside India by an Indian company are deemed to accrue in India.

Bare-Act text Section 9(1)(iv) · Income-tax Act, 1961 · click to expand

Section 9(1)(iv): A dividend paid by an Indian company outside India.

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