Wrong! I also found this on no tax on a stock dividend vs tax on cash dividend. Taxation policies are different for cash dividends and stock dividends. When the company releases the dividends in the form of cash, then the dividend amount goes directly to the bank account of the shareholders. For tax purposes, as per the regulations, these are treated as income and are subject to taxability as per the applicable slab of the individuals/entities. Whereas, in the case of stock dividends, no cash release happens. Instead, only additional shares release happens, i.e., the release is in kind are, like giving additional stock to the shareholders of the company. There is no release of any cash or bank transfer in the case of the stock dividends. Thus, there is no taxation on the stock dividends released by the company. In simple words, shareholders have to pay tax for cash dividends and not for stock dividends. https://efinancemanagement.com/dividend-decisions/cash-vs-stock-dividend
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