The 60-second version
Section 194 requires company to deduct TDS on dividend paid to shareholders — 10% for resident, 20% for NRI unless DTAA lower rate with Form 67 relief.
194 applies on company dividend — not MF redemption lane
Section 194 deducts TDS when Indian company pays dividend to shareholder — 10% for resident, 20% for NRI unless DTAA treaty rate applies.
Returning NRIs receiving dividend in overlap year should verify PAN on folio and Form 26AS credit before filing ITR.
FII lane: Section 196D guide for foreign institutional investor dividends.
Dividend TDS matrix
| Payee | Section 194 | DTAA |
|---|---|---|
| Resident | 10% | N/A |
| NRI | 20% | 5–15% treaty |
| Form 67 | Credit | Treaty relief |
| 26AS | Match | Claim in ITR |
194 sequence
PAN on folio
Company registry.
Dividend credit
Net of TDS.
26AS
Verify 194 credit.
Form 67
If DTAA relief.
ITR
Declare gross dividend.
Flow
194 kit
- PAN.
- Dividend warrant.
- 26AS.
- Form 16A.
- DTAA cert if NRI.
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DTAA rate
India-US/UK/CA/AU treaties often cap dividend WHT at 15% or 25% — file Form 67 for credit.
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0 of 4 checked
vs 196D?
196D is FII dividend; 194 is domestic company dividend to shareholder.
RNOR?
Dividend is India-source — taxable for RNOR/ROR.
Form 67?
Mandatory for DTAA reduced rate credit.
26AS missing?
Raise company TDS rectification with dividend warrant.
Demat folio?
Ensure PAN linked at NSDL/CDSL for correct 194 deduction.
Mutual fund?
MF dividend uses 194K/196A lane — not Section 194 company dividend.
Your tax year is already running.
RNOR status, exit timing, and DTAA benefits all depend on decisions you make before you land. Don't guess.