After the abolishment of Dividend Tax under Budget 2020, from FY 2020-21 dividend which was earlier exempt now became a taxable income. Under Budget 2020, TDS under Section 194 and Section 194K was introduced for deduction of TDS on dividend paid on equity shares and equity mutual funds.
Advance Tax liability would arise on dividend income only once the dividend is declared or paid since it is difficult for the shareholders to estimate the dividend income accurately.
For equity and mutual funds: As per Sec 194, a Domestic Company distributing dividends to a resident should deduct TDS at a rate of 10% if the amount exceeds INR 5000. The taxpayer should report such income under the head IFOS in the ITR filed on Income Tax Website.
Steps to add quarterly breakdown of dividend income:
- Navigate to Incomes > Others
- Refer to your bank statement or your broker Tax P&L and see the dates on which you have received dividend income
- Aggregate the amounts and add it quarterly