Dividends are the share of profits distributed by companies to their shareholders. As a first-time tax filer, if you have received dividend income, it is important to include it in your tax return. It is taxable under the head "Income from Other Sources." The dividend income you receive should be reported in the appropriate section of your tax return form.
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Taxation of Dividend Income
Since April 1, 2020, dividend income is taxable in the hands of the recipient. If the dividend received from an Indian company exceeds Rs. 5,000 in a financial year, it is subject to tax at applicable slab rates. The company paying the dividend deducts tax at source (TDS) at the rate of 10% for resident individuals, if the aggregate dividend exceeds Rs. 5,000 in a financial year.
Interest on Savings Accounts
Interest earned on savings accounts is also taxable under the head "Income from Other Sources." The interest income from savings accounts is generally subject to tax at applicable slab rates.
TDS on Interest Income
Banks and financial institutions are required to deduct TDS on interest income if it exceeds Rs. 10,000 in a financial year. The TDS rate is 10% for resident individuals. However, you can submit Form 15G/15H to the bank to prevent TDS deduction if your total income is below the taxable limit.
Form 26AS
Form 26AS is a comprehensive tax statement that lists the specifics of the tax that various entities have deducted on your behalf, including banks and companies. Before filing your tax return, it is important to review Form 26AS to ensure that the tax deducted on your dividend and interest income is correctly reflected. This helps avoid any discrepancies and ensures accurate reporting in your tax return.
As a first-time tax filer in India, it's crucial to report dividend income and interest on savings accounts in your tax return. By including these income sources and accurately reporting them, you can fulfill your tax obligations and avoid any penalties or legal issues.
Look up more articles here for a smooth first time tax-filing process. All the best!
