# Dividend paid by an Indian Company

## The Rule — One Line

Any dividend paid by an Indian Company to any person outside India is always deemed to accrue or arise in India.

## Why this matters

The deeming fiction means the dividend is taxable in India irrespective of:

Where the shareholder is located
Where the dividend warrant is received/encashed
Whether the shareholder is Resident or Non-Resident

## Quick test

Payer	Recipient	Place of payment	Taxable in India?
Indian Company	NR in USA	USA	Yes
Indian Company	Resident	India	Yes (as Indian income)
Foreign Company	NR in USA	USA	No
Foreign Company	Resident	India	Yes (received in India, but not under Sec 9)

## Memory Hook

> Indian Co. ne dividend diya, matlab HAMESHA India mein hi taxable hoga.

Worked example

### Example 1

Example: Reliance Industries Ltd. (Indian company) declares a dividend of ₹2,00,000 to Mr. Smith, a US resident, and remits it to his New York bank account.

Answer: The dividend is deemed to accrue or arise in India u/s 9(1)(iv) and is taxable in India in Mr. Smith's hands, even though he is a Non-Resident and the money never enters India.

⚠️ Common exam mistakes

Confusing 'dividend paid by Indian Company' with 'dividend paid by a Foreign Company that has Indian operations' — only the former is covered.
Believing that physical receipt outside India makes it non-taxable — the deeming fiction overrides place of receipt.

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

Section 9(1)(iv): The following incomes shall be deemed to accrue or arise in India — a dividend paid by an Indian company outside India.

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Dividend paid by Indian Company [Sec 9(1)(iv)]

Worked example

⚠️ Common exam mistakes