How to calculate & declare tax on dividend in Income Tax Returns


Finance Act 2020 shifted the taxability on dividend income from the hands of the company to the individual investors. 


Unlike earlier, investors will now have to declare their dividend income earned in their tax return forms.


For residents, it is taxable according to slab rate.


For non residents, 20% subject to DTAA


How to calculate Tax on Dividend


This income will be taxed under the head income from other sources


The amount of the dividend will be reflected in the Bank statement.

The Finance Act, 2020 has also imposed a TDS on dividend distribution by companies and mutual funds on or after 1 April 2020. 

Earlier there was no TDS, so the amount reflected in the bank account was the gross dividend amount.


Now, after TDS rule, the amount credited in the bank, may be gross or net, depending on if the company has deducted TDS or not.


So, one should not directly rely on bank statements but also look for the TDS amount in Form 26 AS.


One needs to enter the gross amount for tax calculation as TDS will be available as a credit from the total tax liability of the taxpayer while filing ITR. 


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