Exclusion of dividends referred to in section 115-O from total income [Section 10(34)] :

This clause provides that any income by way of dividends referred to in section 115- O shall be exempt. Under section 115-O, any amount declared, distributed or paid by a domestic company by way of dividend shall be subject to dividend distribution tax @ 15% of gross dividend plus surcharge@12% plus education cess@2% plus secondary and higher education cess@1%. Therefore, a domestic company is liable to pay dividend distribution tax in addition to income-tax chargeable in respect of total income. The dividend income would, however, be exempt in the hands of the shareholder.