The Central Government abolished the Dividend Distribution Tax (DDT) for the current financial year 2021-22. Now instead of this tax, a tax deduction at source (TDS, TDS) of 10% will be levied on the dividend (Dividend) to be distributed to the shareholders or unitholders on behalf of the company or mutual fund. If there is no PAN number then TDS will be cut by 20%.
In the budget, TDS will be applicable to the dividend to be distributed by the funds, not on the earnings from mutual fund units. If you earn more than Rs 5,000 annually from the dividend, then 10% TDS will be charged. Also, TDS will be deducted if the dividend is reinvested.
This information has to be given in the income tax return. For this, section 194K has been added to the Income Tax Act. Those under 60 years can take advantage of Form 15G. At the same time senior citizens can save TDS through Form 15H. TDS can be saved on dividend through Form 15G and 15H.
If the total income of the taxpayer is less than 2.5 lakh rupees and it includes dividend income, then the income from the dividend will not be taxed. But for such people it will be necessary to file income return. This will allow you to claim the TDS deducted on the dividend income back as a refund. Whereas, details of the dividend income and TDS will now be available on the new format of Form 26AS, which will make it easier to file Income Tax Return (ITR).
If you have deducted TDS on dividends received from shares or mutual funds, you can submit Form 15G or Form 15H directly to the company for tax deduction. At the same time, in case of dividend payout option on mutual fund schemes, you can submit this form directly to the Asset Management Company (AMC) or their Registrar and Transfer Agent (RTA).
It is worth noting that Form 15G or Form 15H can be submitted online by visiting the website of companies, AMCs or RTAs. For this, you have to fill your details. Such as PAN number, fund house (AMC) name, folio number etc. This will save you from deducting TDS on dividend income.
According to the Income Tax Act, 15G or Form 15H can be deposited at the same time, people whose income is less than the exemption limit. Income up to Rs 2.5 lakh is adopted for people below 60 years of age. At the same time, taxability is not made on income up to Rs 3 lakh for people above 60 years and below 80 years of age and up to Rs 5 lakh for those above 80 years of age.