Legislation to require withholding of taxes on dividends and interest probably is dead but it still is not buried.

Both houses of Congress have voted to repeal the 10 percent withholding, and Treasury Secretary Donald T. Regan has instructed the Internal Revenue Service to postpone enforcement until the end of July. The IRS began notifying financial institutions yesterday that it was deferring collection. But the law is still on the books, and investment industry officials said yesterday that financial institutions should not dismantle their collection mechanisms until the outcome is final.

It is clear, however, as savings and banking industry officials said yesterday, that savers and investors will not have anything taken out of their dividend and interest payments next month, and it is probable that withholding finally will be interred within the next few weeks.

But it is still possible that President Reagan, who supported withholding, will veto whatever version of the repeal measure emerges from a House-Senate conference. There are probably enough votes in both houses of Congress to override a veto, but there is still just enough uncertainty about the outcome to keep the investment community from relaxing.

"We're telling our members it's not over yet," said Kenneth Guenther, executive director of the 7,000-member Independent Bankers Association. "We don't know what's going to come out of the conference. We're advising our members to keep the pressure on."

"I'm confident the race has been won," said Roy G. Green, executive vice president of the U.S. League of Savings Institutions. "But we are not recommending that our institutions turn off their computer program. We do know it's safe to postpone things for the month of July."

The reason for the lingering uncertainty in the face of an overwhelming desire among most members of Congress to get rid of withholding once and for all and calm their constituents is that the Senate version of the repeal legislation is vastly different from the House bill.

By a vote of 382--41, the House overrode the objections of Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) and approved a straightforward repeal of the withholding rule adopted as part of the 1982 tax act. Rostenkowski and other senior Ways and Means members of both parties objected to repeal because it is expected to cost the Treasury $13.4 billion in tax revenue over the next five years.

The Senate, at the insistence of Finance Committee Chairman Bob Dole (R-Kan.), who also opposed repeal, attached to the repeal measure not only a package of tax-compliance and enforcement rules but also four other major, unrelated pieces of legislation: the administration's Caribbean Basin and Urban Enterprise Zone programs, expanded presidential authority to deal with trade disputes, and extension of tax-exempt mortgage revenue bonds.

Regan agreed to the one-month postponement in withholding only on condition that the compliance measure be included. But it is not clear how many of the other components, if any, will survive a House-Senate conference, which in any case is not scheduled to begin before June 28. What many bankers fear is that, if the House insists on stripping the Caribbean Basin and Urban Enterprise programs from the bill, Reagan will veto it, prolonging the uncertainty about withholding well into the summer.