The distribution of a company's earning to its shareholders is called dividend. It is given to shareholders owning equity shared or mutual funds. Dividend income comes under the head Income from Other Sources (IFOS).
The domestic companies are required to pays Dividend Distribution Tax. Such dividend income up to INR 10 Lakh in a financial year is exempt in the hands of a shareholder.
However, the dividend received from a foreign company is taxed in the hands of a resident.
Also, the dividend received from co-operative societies or foreign companies is also fully taxable.