How are dividends from domestic companies treated as deemed income?

Dividends received from domestic companies are considered as deemed income and are taxable in the hands of the recipient shareholders. The dividend distribution tax paid by the company is deemed as the final tax liability on the dividends, and the shareholders are not required to pay any additional tax on the dividend income received. However, for certain categories of taxpayers, such as individuals and HUFs with income above a specified threshold, dividends from domestic companies exceeding a certain limit are taxable at applicable rates.