I have read that dividend income will be pre-filled in IT form this year. How can I check whether the amount already filled is correct? Where can I find the details of dividend income received in the past one year, and what will be the tax rate on the divided income earned each quarter?
—Name withheld on request
We have assumed that you are a resident of India and the dividends received are from Indian companies. The Finance Minister in his Union Budget 2021 speech announced that to ease compliance for the taxpayer, apart from other income, the details of dividend income will also be pre-filled in the Income Tax Return utility.
The exact mechanics and level of detail already filled in by the tax department in the utility remains to be seen and may be available in due course.
Generally, each company pays more dividends than ₹5,000 A resident taxpayer is required to withhold taxes from such dividends at the rate of 10% and file a withholding tax return in this regard. Once the said withholding tax return is filed by the company(s) concerned, the details of such dividend are reflected in the investor’s Form 26AS. Therefore, with respect to the dividend information already filled in the tax utility, from a practical point of view, you can expect that only such dividend income which is reported by the respective companies in their Withholding Tax Return (WTR) will be credited to your account first. can be filled with Tax filing utility.
In any case, even where the information is pre-filled in the utility, it is advised that the taxpayer should check the pre-filled information from his dividend statement. You can get the details of the dividend paid to you from your broker or portfolio manager who can issue you the dividend statement for the respective period. You can also check the details of dividend from your bank statement where such dividends are credited. The company declaring the dividend will also send you a message in this regard.
The dividend income will be subject to tax in your hands at the applicable slab rates (plus applicable surcharges, if any, and education cess). It may be noted that the maximum applicable surcharge on dividend income is 15%.
Parizad Sirwalla is Partner and Head, Global Mobility Services, Tax, KPMG in India.
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