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Calculation of income tax on dividend income
We add dividend income with other incomes to arrive at income tax. Sometimes dividend is credited to account after deduction of TDS. In that case which dividend amount i e whole amount of dividend or net amount of dividend after TDS is to be taken for arriving at income tax. please clarify.
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- The normal rate of TDS is 10% on dividend income paid in excess of Rs 5,000 from a company or mutual fund. However, as a COVID-19 relief measure, the government reduced the TDS rate to 7.5% for distribution from 14 May 2020 until 31 March 2021.
- The tax deducted will be available as a credit from the total tax liability of the taxpayer while filing ITR.
WHOLE AMOUNT INCLUDING TDS IS GROSS DIVIDEND INCOME.
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