How TDS is applicable on dividend received on shares-MF, know the rules

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TDS on Dividends: Dividend Distribution Tax (DDT) is no longer applicable on earnings from equity shares or dividends received on any mutual fund scheme, but TDS is deducted on it. Let us tell that before March 31, 2020, the dividend received on equity shares and mutual funds was tax free, but after April 1, 2020, the dividend has come under tax and with this TDS has also been imposed on it. Is.

Know what is the rule

Under the Income Tax Act, if the dividend received in a year exceeds Rs 5,000, then 10% TDS will be levied on it. Also, TDS will be deducted even if the dividend is reinvested. Apart from this, information about this will have to be given in the income tax return. For this, section 194K has been added to the Income Tax Act. At the same time, those below 60 years of age can take advantage of Form 15G. Senior citizens can save TDS on dividend through Form 15G and 15H. Keep in mind that in the absence of PAN, 20 percent TDS will be deducted.

How to Avoid TDS on Dividend Income

If you have deducted TDS on dividends received from shares or mutual funds, then you can submit Form 15G or Form 15H directly to the company for tax deduction. Whereas, in case of dividend payout option on mutual fund schemes, you can submit this form directly to the asset management company or their registrar and transfer agent. Explain that Form 15G or Form 15H can be submitted online by visiting the website of companies, AMCs or RTAs. For this, you will have to fill your details like PAN number, name of the fund house, 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 submitted only by people whose income is less than the exemption limit.

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