A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a proportion of the profit as a dividend to shareholders.
In India, Now dividend distribution tax is removed and now shareholder has to pay the tax including dividend in other sources.
No company shall declare dividend unless carried over previous losses and depreciation not provided in the previous year or years are set off against profit of the company of the current year as per Section 123.
Interim Dividend can be declared from the surplus in the Profit and Loss account and out of profits of the current financial year. If the company is in losses during the current FY, then the Rate of Dividend will be the average dividends declared by the company during the 3 immediately preceding years.