Section 7
Section 7: income deemed to be received and dividend deemed to be income in a tax year
Section 7 deals with timing - it deems certain amounts to be "received" by a taxpayer in a particular tax year even though no cash may actually have changed hands that year, and it fixes exactly when a dividend is treated as income.
Incomes deemed to be received (Section 7(1))
Three items are deemed to be received in the tax year:
- The annual accretion in that year to the balance of an employee's recognised provident fund account, to the extent provided in Schedule XI, Part A, paragraph 6.
- The transferred balance in a recognised provident fund, to the extent provided in Schedule XI, Part A, paragraphs 11(4) and 11(5).
- The contribution made by the Central Government or any other employer in that year to an employee's account under the pension scheme referred to in section 124.
When a dividend is deemed to be income (Section 7(2))
A dividend declared, distributed or paid by a company (within the meaning of the sub-clauses of the "dividend" definition in section 2(40)) is deemed to be the income of the tax year in which it is declared, distributed or paid.
An interim dividend is deemed to be income of the tax year in which the amount of the dividend is unconditionally made available by the company to the member entitled to it.
Frequently asked questions
Does Section 7 create new taxable income, or just fix timing?
It mainly fixes timing - it tells you in which tax year certain amounts (provident fund accretions/transfers, pension scheme contributions, and dividends) are treated as received or as income, so that the correct year's return includes them.
In which year is an interim dividend taxed?
In the tax year in which the amount is unconditionally made available by the company to the shareholder entitled to it.
Related sections
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Talk to our tax team about this sectionLast updated 9 September 2026