TDS on Dividend Income: How to get relief if you don’t have taxable income

Updated: April 14, 2021

TDS on Dividend Income: How to get relief if you don’t have taxable income

To make filing an Income Tax Return (ITR) simpler and income suppression more difficult, the details of dividend income and TDS will now be available in the current format of Form 26AS. Due to the abolition of the Dividend Distribution Tax (DDT), dividend income becomes taxable in the hands of investors, and tax deduction at source (TDS) becomes available on dividend payout u/s 194 of the Income Tax Act.

As a result, a TDS of 10% is levied on dividend income of over Rs 5,000 in a financial year. if the investor’s PAN is available for the year If the PAN is not open, the TDS rate will be 20%.To make filing an Income Tax Return (ITR) simpler and income suppression more difficult, the details of dividend income and TDS will now be available in the current format of Form 26AS.

However, if an individual’s dividend income is less than Rs 2.5 lakh or his or her overall income, including dividend income, is not taxable, he or she must file a tax return to claim back the TDS paid on dividend income as a tax refund. The good news is that just as with a bank FD, you can now deposit Form 15G (for individuals under 60 years of age) or Form 15H (for senior citizens) to ensure that no TDS is deducted from your dividend income if your total income for the financial year does not exceed Rs 2.5 lakh.

Individual investors should apply Form 15G or Form 15H–as applicable–to the company directly for dividends on securities. The relevant form may be deposited directly to the Asset Management Company (AMC) or their Registrar and Transfer Agents (RTA)–such as CAMS and KFintech – in the case of the Dividend Payout option on Mutual Fund schemes (branch or Karvy).

Companies, AMCs, and RTAs may apply the appropriate Form 15G or Form 15H online by visiting their websites.PAN, name of the Fund House (AMC), Folio Number, and other details are required when applying for MF schemes via RTAs.Income Distribution cum Capital Withdrawal Option (IDCW) estimated income, projected Total Income in the Financial Year and The year of the declaration.

If you have IDCW as part of your salary and your overall income is not taxable, you can apply for Form 15G/H as soon as possible. Otherwise, you must file an ITR if you earn a dividend after TDS has been deducted.

NEED A LOAN?

I have read the Privacy Policy & Agree to Terms & Conditions and authorize Dialabank & its partner institutions to Call or SMS me with reference to my application.