{"id":9087,"date":"2021-10-20T17:56:09","date_gmt":"2021-10-20T12:26:09","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=9087"},"modified":"2025-10-09T15:29:43","modified_gmt":"2025-10-09T09:59:43","slug":"difference-between-dividend-and-interest","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/difference-between-dividend-and-interest\/","title":{"rendered":"Difference Between Dividend and Interest (7 Points) | Important Article"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e9c137c7565\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e9c137c7565\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dividend-and-interest\/#Difference_Between_Dividend_and_Interest\" >Difference Between Dividend and Interest<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dividend-and-interest\/#Meaning_of_Dividend\" >Meaning of Dividend<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dividend-and-interest\/#Definition\" >Definition<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dividend-and-interest\/#Meaning_of_Interest\" >Meaning of Interest<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dividend-and-interest\/#Difference_Between_Dividend_and_Interest-2\" >Difference Between Dividend and Interest<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center has-black-color has-text-color\"><span class=\"ez-toc-section\" id=\"Difference_Between_Dividend_and_Interest\"><\/span><strong>Difference Between Dividend and Interest<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Difference-Between-Dividend-and-Interest-1024x576.jpg\" alt=\"Difference Between Dividend and Interest\" class=\"wp-image-9106 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Difference-Between-Dividend-and-Interest-1024x576.jpg 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Difference-Between-Dividend-and-Interest-300x169.jpg 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Difference-Between-Dividend-and-Interest-768x432.jpg 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Difference-Between-Dividend-and-Interest-1536x864.jpg 1536w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Difference-Between-Dividend-and-Interest-640x360.jpg 640w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/10\/Difference-Between-Dividend-and-Interest.jpg 1920w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;\" \/><figcaption class=\"wp-element-caption\">Difference Between Dividend and Interest<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_Dividend\"><\/span><strong>Meaning of<strong><strong><strong><strong> <a href=\"https:\/\/www.icsi.edu\/media\/portals\/0\/DIVIDEND.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Dividend<\/a><\/strong><\/strong><\/strong><\/strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is that part of the profits of the company which is distributed amongst its shareholders. Dividend is \u2018a share in distributable profits of the company to which the shareholder is entitled when it is formally declared b the company.&#8217;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Definition\"><\/span>Definition<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The Institute of Chartered Accountants of India has defined Dividend as, \u201c<strong><em>a distribution to shareholders out of profits or reserves available for this purpose.<\/em><\/strong>\u201d<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_Interest\"><\/span><strong>Meaning of <strong><strong><strong><strong><strong>Inte<\/strong><\/strong><\/strong><\/strong><\/strong><\/strong>rest<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In financial terms, <strong><em>it is a payment made for using money of another<\/em><\/strong>. i.e. Borrower takes money from the lender.<br>So interest is the cost of renting money, for the borrower and it is the income from lending money for the lender.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-fixed-capital-and-working-capital\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-fixed-capital-and-working-capital\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Fixed Capital and Working Capital<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-owned-capital-and-borrowed-capital\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-owned-capital-and-borrowed-capital\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Owned Capital and Borrowed Capital<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-debenture-and-share\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Debenture and Share<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-preference-shares-and-equity-shares\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-preference-shares-and-equity-shares\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Preference Shares and Equity Shares<\/a><\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Difference_Between_Dividend_and_Interest-2\"><\/span><strong><strong><strong><strong>Difference Between Dividend and Interest<\/strong><\/strong><\/strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Points<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong><strong>Dividend<\/strong><\/strong><\/strong><\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong><strong><strong>Inter<\/strong><\/strong><\/strong>est<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1) Meaning<\/td><td class=\"has-text-align-center\" data-align=\"center\">Dividend is the return payable to<br>the shareholders of the company<br>for their investment in the share<br>capital.<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is the return payable to the<br>creditors of the company viz.<br>Debenture holder \/ Deposit<br>holders for the loan given b<br>them to the company.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2) Given to whom<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is paid to the member i.e. the<br>owners of the company.<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is paid to the creditor of the<br>company.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">3) Obligation<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is to be paid only when<br>company has made profits.<br>Therefore no obligation \/<br>compulsion to pay dividend.<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is not linked to the profits of<br>the company. Payment of interest<br>is an obligation and is to be paid<br>by the company compulsorily.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">4) When Payable<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is payable when a company<br>earns sufficient profit in a year<br>after fulfilling all obligations.<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is payable every year<br>irrespective of the profits of the<br>company.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">5) Rate<\/td><td class=\"has-text-align-center\" data-align=\"center\">It is paid at a fluctuating rate<br>to the equity shareholders since<br>it is linked to the profits of<br>company.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Rate of interest is fixed and pre-<br>determined at the time of issue<br>of the security.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">6) Resolution<\/td><td class=\"has-text-align-center\" data-align=\"center\">Payment of Final Dividend<br>requires a Board resolution and<br>an ordinary resolution at the<br>AGM while Interim Dividend<br>can be paid b passing only a<br>Board Resolution.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Payment of interest does not<br>require passing of a resolution<br>at any meeting.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">7) Accounting Treatment \/ Aspect<\/td><td class=\"has-text-align-center\" data-align=\"center\">Dividend is an appropriation of<br>profit.<\/td><td class=\"has-text-align-center\" data-align=\"center\">Interest is a charge on profit.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dematerialisation-and-rematerialisation\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dematerialisation-and-rematerialisation\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference between Dematerialisation and Rematerialisation<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-final-dividend-and-interim-dividend\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/difference-between-final-dividend-and-interim-dividend\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Final dividend and Interim Dividend<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-dividend-and-interest\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Dividend and Interest<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/difference-between-primary-and-secondary-market\/\" target=\"_blank\" rel=\"noreferrer noopener\">Difference Between Primary and Secondary Market<\/a><\/li>\n<\/ul>\n\n\n\n<p><strong>Learn the chapters on TYBCOM from our <a href=\"https:\/\/studio.youtube.com\/channel\/UCExY0hxogv75WdPK1MFS3fw\" data-type=\"link\" data-id=\"https:\/\/studio.youtube.com\/channel\/UCExY0hxogv75WdPK1MFS3fw\" target=\"_blank\" rel=\"noopener\">YouTube channel<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":9106,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[10],"tags":[3367],"class_list":["post-9087","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-educational-blogs","tag-difference-between-dividend-and-interest"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/9087","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=9087"}],"version-history":[{"count":5,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/9087\/revisions"}],"predecessor-version":[{"id":39665,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/9087\/revisions\/39665"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/9106"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=9087"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=9087"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=9087"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}