Tips on how to keep away from TDS on dividend earnings for FY 2023-24 & AY 2024-25?

Suresh Surana, Founder, RSM India

For Resident Taxpayers

Suresh Surana, Founder, RSM India

For Resident Taxpayers

The Finance Act 2020 abolished the idea of Dividend Distribution Tax (‘DDT’) and likewise withdrew the exemption u/s 10(34) of the Earnings Tax Act, 1961 (‘IT Act’) ensuing into taxability of dividends within the fingers of the last word shareholders. Accordingly, Part 194 of the IT Act offered that the businesses declaring dividends are below an obligation to withhold tax @10% earlier than making any dividend cost to it’s resident shareholders. 

The Finance Act 2020 abolished the idea of Dividend Distribution Tax (‘DDT’) and likewise withdrew the exemption u/s 10(34) of the Earnings Tax Act, 1961 (‘IT Act’) ensuing into taxability of dividends within the fingers of the last word shareholders. Accordingly, Part 194 of the IT Act offered that the businesses declaring dividends are below an obligation to withhold tax @10% earlier than making any dividend cost to it’s resident shareholders. 

Nonetheless, the corporate is below no obligation to deduct tax at supply, if the mixture quantity of dividend distributed/prone to be distributed in a specific monetary 12 months doesn’t exceed Rs. 5,000 and the dividend is paid by any mode apart from money.

Nonetheless, the corporate is below no obligation to deduct tax at supply, if the mixture quantity of dividend distributed/prone to be distributed in a specific monetary 12 months doesn’t exceed Rs. 5,000 and the dividend is paid by any mode apart from money.

Additional, in accordance with the provisions of part 194K, TDS @10% is to be deducted by an individual, earlier than paying earnings in respect of models of mutual funds or different specified corporations to a resident investor. Akin to part 194, TDS is to not be deducted if the mixture quantum of earnings paid/prone to be paid in a specific monetary 12 months doesn’t exceed Rs. 5,000 or if the earnings is within the nature of capital positive factors.

Additional, in accordance with the provisions of part 194K, TDS @10% is to be deducted by an individual, earlier than paying earnings in respect of models of mutual funds or different specified corporations to a resident investor. Akin to part 194, TDS is to not be deducted if the mixture quantum of earnings paid/prone to be paid in a specific monetary 12 months doesn’t exceed Rs. 5,000 or if the earnings is within the nature of capital positive factors.

People whose complete earnings exceeds the Primary Exemption Restrict (BEL) are required to file their Earnings Tax Return (ITR) in accordance with the provisions of part 139 of the IT Act. Thus, a person who derives dividend earnings in extra of Rs. 5,000 in a specific FY and whose complete earnings doesn’t cross the BEL, can be required to file an earnings tax return just for the aim of claiming the refund of TDS on dividend.

People whose complete earnings exceeds the Primary Exemption Restrict (BEL) are required to file their Earnings Tax Return (ITR) in accordance with the provisions of part 139 of the IT Act. Thus, a person who derives dividend earnings in extra of Rs. 5,000 in a specific FY and whose complete earnings doesn’t cross the BEL, can be required to file an earnings tax return just for the aim of claiming the refund of TDS on dividend.

Thus, resident people whose estimated complete annual earnings (together with earnings from dividends) is beneath the BEL, can submit Kind 15G to the corporate or mutual fund paying the dividend. In the identical state of affairs, resident senior residents can apply in Kind 15H for requesting no deduction of TDS. 

Thus, resident people whose estimated complete annual earnings (together with earnings from dividends) is beneath the BEL, can submit Kind 15G to the corporate or mutual fund paying the dividend. In the identical state of affairs, resident senior residents can apply in Kind 15H for requesting no deduction of TDS. 

Other than these, each these kinds will be filed by the resident people in case their complete tax legal responsibility is nil after taking the dividend earnings into consideration. In such case, although the taxpayer can be required to furnish his tax return (offered their complete earnings exceeds the BEL), they will keep away from TDS on such dividend.

Other than these, each these kinds will be filed by the resident people in case their complete tax legal responsibility is nil after taking the dividend earnings into consideration. In such case, although the taxpayer can be required to furnish his tax return (offered their complete earnings exceeds the BEL), they will keep away from TDS on such dividend.

These kinds are legitimate for a monetary 12 months and have to be submitted afresh for each FY through which the person intends to avail the advantage of no deduction. It’s recommendable that the taxpayers submit such kinds firstly of each FY so as to keep away from deduction of TDS.

These kinds are legitimate for a monetary 12 months and have to be submitted afresh for each FY through which the person intends to avail the advantage of no deduction. It’s recommendable that the taxpayers submit such kinds firstly of each FY so as to keep away from deduction of TDS.

For Non-Resident (NR) Taxpayers

For Non-Resident (NR) Taxpayers

As per part 195 learn with part 115A of the IT Act, corporations declaring dividends should withhold tax @20% (plus relevant surcharge and cess) earlier than remitting dividend to Non-Resident shareholders. Additional, part 90(2) of the IT Act supplies each taxpayer can select between the helpful fee of TDS as per earnings tax provisions or related DTAA. 

As per part 195 learn with part 115A of the IT Act, corporations declaring dividends should withhold tax @20% (plus relevant surcharge and cess) earlier than remitting dividend to Non-Resident shareholders. Additional, part 90(2) of the IT Act supplies each taxpayer can select between the helpful fee of TDS as per earnings tax provisions or related DTAA. 

Nonetheless, so as to declare the advantage of DTAA, the NRs could get hold of the required paperwork reminiscent of Tax residency certificates, Kind 10F, and so on. All these paperwork needs to be submitted by the non-resident taxpayer to the corporate/ mutual fund on the time/ earlier than such dividend cost is made, for availing of the helpful withholding tax fee.

Nonetheless, so as to declare the advantage of DTAA, the NRs could get hold of the required paperwork reminiscent of Tax residency certificates, Kind 10F, and so on. All these paperwork needs to be submitted by the non-resident taxpayer to the corporate/ mutual fund on the time/ earlier than such dividend cost is made, for availing of the helpful withholding tax fee.

Gautam Kalia, SVP and Head Tremendous Investor at Sharekhan by BNP Paribas

All of the dividend earnings obtained are taxable and the TDS fee of 10% is charged if the dividend earnings paid is in extra of Rs.5000. If the investor’s annual earnings is beneath the exemption restrict then he can submit the shape 15G/15H for not deduction of TDS. Buyers who need common earnings could take into account SWP facility as an alternative of dividend earnings from mutual fund schemes to keep away from TDS. The SWP facility is withdrawal from scheme and all of the withdrawal contains principal and capital positive factors. Buyers must pay tax on capital achieve solely as per the brief time period or long run achieve tax.

Gautam Kalia, SVP and Head Tremendous Investor at Sharekhan by BNP Paribas

All of the dividend earnings obtained are taxable and the TDS fee of 10% is charged if the dividend earnings paid is in extra of Rs.5000. If the investor’s annual earnings is beneath the exemption restrict then he can submit the shape 15G/15H for not deduction of TDS. Buyers who need common earnings could take into account SWP facility as an alternative of dividend earnings from mutual fund schemes to keep away from TDS. The SWP facility is withdrawal from scheme and all of the withdrawal contains principal and capital positive factors. Buyers must pay tax on capital achieve solely as per the brief time period or long run achieve tax.

Ruchika Bhagat, MD Neeraj Bhagat & Firm

Submit Kind 15G/15H: In case you are eligible for a decrease tax deduction or no tax deduction in any respect, you may submit Kind 15G/15H to the corporate or mutual fund home the place you maintain the dividend-paying shares or mutual funds. These kinds declare that your complete earnings for the 12 months is beneath the taxable restrict or that your tax legal responsibility is nil.

Ruchika Bhagat, MD Neeraj Bhagat & Firm

Submit Kind 15G/15H: In case you are eligible for a decrease tax deduction or no tax deduction in any respect, you may submit Kind 15G/15H to the corporate or mutual fund home the place you maintain the dividend-paying shares or mutual funds. These kinds declare that your complete earnings for the 12 months is beneath the taxable restrict or that your tax legal responsibility is nil.

Spend money on progress choice: As an alternative of investing in dividend-paying shares or mutual funds, you may go for the expansion choice. Beneath the expansion choice, the income made by the corporate or mutual fund are reinvested within the enterprise, and no dividend is paid out. Subsequently, no TDS is relevant on such investments.

Spend money on progress choice: As an alternative of investing in dividend-paying shares or mutual funds, you may go for the expansion choice. Beneath the expansion choice, the income made by the corporate or mutual fund are reinvested within the enterprise, and no dividend is paid out. Subsequently, no TDS is relevant on such investments.

Examine the tax treaty with different international locations: In case you are an NRI (Non-Resident Indian) and are eligible for a tax exemption below the tax treaty between India and your nation of residence, you may submit the required paperwork to keep away from TDS on dividend earnings.

Examine the tax treaty with different international locations: In case you are an NRI (Non-Resident Indian) and are eligible for a tax exemption below the tax treaty between India and your nation of residence, you may submit the required paperwork to keep away from TDS on dividend earnings.

Plan your investments: In case your dividend earnings is prone to exceed the taxable restrict, you may plan your investments in such a means that your complete earnings stays beneath the taxable restrict. This may be performed by investing in tax-saving devices or by timing your investments to keep away from a excessive earnings in any specific monetary 12 months.

Plan your investments: In case your dividend earnings is prone to exceed the taxable restrict, you may plan your investments in such a means that your complete earnings stays beneath the taxable restrict. This may be performed by investing in tax-saving devices or by timing your investments to keep away from a excessive earnings in any specific monetary 12 months.

Declare refund: If TDS has been deducted, and you aren’t liable to pay tax, you may declare a refund whereas submitting your earnings tax return.

Declare refund: If TDS has been deducted, and you aren’t liable to pay tax, you may declare a refund whereas submitting your earnings tax return.

Mushraff Hussain, COO of Ezeepay

You possibly can successfully keep away from or decrease TDS in your dividend earnings and profit totally out of your funding returns. Let me stroll you thru :

Mushraff Hussain, COO of Ezeepay

You possibly can successfully keep away from or decrease TDS in your dividend earnings and profit totally out of your funding returns. Let me stroll you thru :

1. In case your complete dividend earnings is lower than Rs. 5,000 in a monetary 12 months, then TDS won’t apply to your curiosity earnings obtained.

1. In case your complete dividend earnings is lower than Rs. 5,000 in a monetary 12 months, then TDS won’t apply to your curiosity earnings obtained.

2. You possibly can submit Kind 15G/15H to the corporate or mutual fund declaring that your complete earnings for the monetary 12 months is beneath the taxable restrict. Thus, TDS mustn’t apply to your dividend earnings.

2. You possibly can submit Kind 15G/15H to the corporate or mutual fund declaring that your complete earnings for the monetary 12 months is beneath the taxable restrict. Thus, TDS mustn’t apply to your dividend earnings.

3. When you’ve got invested in a tax-free bond, you don’t have any TDS. will apply to the curiosity earnings obtained.

3. When you’ve got invested in a tax-free bond, you don’t have any TDS. will apply to the curiosity earnings obtained.

4. You possibly can spend money on progress mutual funds as an alternative of dividend mutual funds to keep away from TDS.

4. You possibly can spend money on progress mutual funds as an alternative of dividend mutual funds to keep away from TDS.

5. For those who fall below a decrease tax bracket, then you may declare your dividend earnings in your tax return and declare a refund for the TDS deducted.

5. For those who fall below a decrease tax bracket, then you may declare your dividend earnings in your tax return and declare a refund for the TDS deducted.

Yashoraj Tyagi, CTO &; CBO, CASHe

To keep away from TDS (Tax Deducted at Supply) on dividend earnings, you may observe these steps:

Yashoraj Tyagi, CTO &; CBO, CASHe

To keep away from TDS (Tax Deducted at Supply) on dividend earnings, you may observe these steps:

1. Submit Kind 15G/15H: In case your complete earnings for the monetary 12 months is beneath the taxable restrict, you may submit Kind 15G (for people) or Kind 15H (for senior residents) to the corporate or mutual fund home from which you’re receiving the dividend earnings. This kind declares that your earnings for the monetary 12 months is beneath the taxable restrict, and subsequently, TDS shouldn’t be deducted out of your dividend earnings.

1. Submit Kind 15G/15H: In case your complete earnings for the monetary 12 months is beneath the taxable restrict, you may submit Kind 15G (for people) or Kind 15H (for senior residents) to the corporate or mutual fund home from which you’re receiving the dividend earnings. This kind declares that your earnings for the monetary 12 months is beneath the taxable restrict, and subsequently, TDS shouldn’t be deducted out of your dividend earnings.

2. Spend money on tax-free dividend earnings funds: You possibly can spend money on mutual funds that provide tax-free dividend earnings. Some mutual funds spend money on shares that generate tax-free dividends, and the earnings obtained from such funds is exempt from tax.

2. Spend money on tax-free dividend earnings funds: You possibly can spend money on mutual funds that provide tax-free dividend earnings. Some mutual funds spend money on shares that generate tax-free dividends, and the earnings obtained from such funds is exempt from tax.

3. Go for progress choice: As an alternative of receiving dividends, you may go for the expansion choice in mutual funds. On this choice, the dividends are reinvested within the fund, which will increase the NAV (Internet Asset Worth) of the mutual fund. The positive factors made on the funding are taxed solely on the time of redemption, and there’s no TDS on the dividend earnings.

3. Go for progress choice: As an alternative of receiving dividends, you may go for the expansion choice in mutual funds. On this choice, the dividends are reinvested within the fund, which will increase the NAV (Internet Asset Worth) of the mutual fund. The positive factors made on the funding are taxed solely on the time of redemption, and there’s no TDS on the dividend earnings.

4. Plan your investments to optimize tax advantages: You possibly can plan your investments to optimize the tax advantages. For instance, you may spend money on tax-saving mutual funds, PPF, or NPS to scale back your taxable earnings and keep away from TDS on dividend earnings.

4. Plan your investments to optimize tax advantages: You possibly can plan your investments to optimize the tax advantages. For instance, you may spend money on tax-saving mutual funds, PPF, or NPS to scale back your taxable earnings and keep away from TDS on dividend earnings.

You will need to notice that even when TDS is deducted in your dividend earnings, you may declare a refund by submitting your earnings tax return. Subsequently, it’s advisable to declare your dividend earnings in your earnings tax return and declare the refund if relevant.

You will need to notice that even when TDS is deducted in your dividend earnings, you may declare a refund by submitting your earnings tax return. Subsequently, it’s advisable to declare your dividend earnings in your earnings tax return and declare the refund if relevant.

Prateek Toshniwal, Co-Founding father of IVY Development Associates, MI Capital (UAE)

Sensible investing is not nearly making income, it is also about minimizing your tax liabilities. For those who’re incomes dividend earnings, it is essential to take steps to keep away from TDS. Firstly, be sure that your complete dividend earnings from all sources is beneath the taxable restrict of Rs. 5,000. If it exceeds this restrict, take into account investing in tax-saving devices reminiscent of ELSS, PPF or NPS to scale back your taxable earnings. 

Prateek Toshniwal, Co-Founding father of IVY Development Associates, MI Capital (UAE)

Sensible investing is not nearly making income, it is also about minimizing your tax liabilities. For those who’re incomes dividend earnings, it is essential to take steps to keep away from TDS. Firstly, be sure that your complete dividend earnings from all sources is beneath the taxable restrict of Rs. 5,000. If it exceeds this restrict, take into account investing in tax-saving devices reminiscent of ELSS, PPF or NPS to scale back your taxable earnings. 

Moreover, you may go for the expansion choice as an alternative of the dividend choice whereas investing in mutual funds, as this may defer the tax legal responsibility till you redeem your funding. One other technique to keep away from TDS on dividend earnings is by investing in shares that provide decrease dividend yields, as these are taxed at a decrease fee. Keep in mind, being tax-savvy is as vital as being investment-savvy, and taking the fitting steps can go a good distance in maximizing your returns.

Moreover, you may go for the expansion choice as an alternative of the dividend choice whereas investing in mutual funds, as this may defer the tax legal responsibility till you redeem your funding. One other technique to keep away from TDS on dividend earnings is by investing in shares that provide decrease dividend yields, as these are taxed at a decrease fee. Keep in mind, being tax-savvy is as vital as being investment-savvy, and taking the fitting steps can go a good distance in maximizing your returns.

S Ravi, Former Chairman of Bombay Inventory Change (BSE)

Tax Deducted at Supply (TDS) is a tax collected by the federal government from the earnings earned by a person or an organization. Within the case of dividend earnings, TDS is deducted by the corporate paying the dividend. Nonetheless, there are methods to keep away from TDS on dividend earnings:

S Ravi, Former Chairman of Bombay Inventory Change (BSE)

Tax Deducted at Supply (TDS) is a tax collected by the federal government from the earnings earned by a person or an organization. Within the case of dividend earnings, TDS is deducted by the corporate paying the dividend. Nonetheless, there are methods to keep away from TDS on dividend earnings:

1. Submit Kind 15G/15H: People whose complete earnings is beneath the taxable restrict can submit Kind 15G/15H to the corporate paying the dividend. This can be sure that no TDS is deducted from the dividend earnings.

1. Submit Kind 15G/15H: People whose complete earnings is beneath the taxable restrict can submit Kind 15G/15H to the corporate paying the dividend. This can be sure that no TDS is deducted from the dividend earnings.

2. Go for the brand new tax regime: Beneath the brand new tax regime, dividend earnings is taxed on the particular person’s relevant earnings tax fee, and no TDS is deducted.

2. Go for the brand new tax regime: Beneath the brand new tax regime, dividend earnings is taxed on the particular person’s relevant earnings tax fee, and no TDS is deducted.

3. Spend money on tax-free dividend earnings funds: Investing in tax-free dividend earnings funds can assist people keep away from TDS on dividend earnings. These funds spend money on corporations that don’t pay dividend distribution tax (DDT) and, subsequently, no TDS is deducted.

3. Spend money on tax-free dividend earnings funds: Investing in tax-free dividend earnings funds can assist people keep away from TDS on dividend earnings. These funds spend money on corporations that don’t pay dividend distribution tax (DDT) and, subsequently, no TDS is deducted.

4. Submit PAN card particulars: People can keep away from TDS on dividend earnings by submitting their PAN card particulars to the corporate paying the dividend. This can be sure that TDS is deducted at a decrease fee or by no means, relying on the person’s relevant earnings tax fee.

4. Submit PAN card particulars: People can keep away from TDS on dividend earnings by submitting their PAN card particulars to the corporate paying the dividend. This can be sure that TDS is deducted at a decrease fee or by no means, relying on the person’s relevant earnings tax fee.

5. Declare a refund: People who’ve paid TDS on dividend earnings can declare a refund by submitting their earnings tax returns. This may be performed by mentioning the TDS quantity within the tax return and claiming a refund of the surplus tax paid.

5. Declare a refund: People who’ve paid TDS on dividend earnings can declare a refund by submitting their earnings tax returns. This may be performed by mentioning the TDS quantity within the tax return and claiming a refund of the surplus tax paid.

Malhar Majumder, Accomplice – Constructive Vibes

Efficient 1st April 1, 2020, dividends should not tax-free, as per the brand new amendments put forth within the Finance Act, 2020. Nonetheless, no tax is deducted on the dividends paid to resident people, if the mixture dividend distributed or prone to be distributed throughout the monetary 12 months doesn’t exceed INR. 5000. A ten% TDS is payable on the dividend earnings quantity over INR 5,000 throughout the fiscal 12 months. 

Malhar Majumder, Accomplice – Constructive Vibes

Efficient 1st April 1, 2020, dividends should not tax-free, as per the brand new amendments put forth within the Finance Act, 2020. Nonetheless, no tax is deducted on the dividends paid to resident people, if the mixture dividend distributed or prone to be distributed throughout the monetary 12 months doesn’t exceed INR. 5000. A ten% TDS is payable on the dividend earnings quantity over INR 5,000 throughout the fiscal 12 months. 

If the PAN just isn’t submitted, the TDS fee can be 20%. If a person’s earnings, which incorporates the dividend earnings is lower than INR 2.5 lakh, it isn’t taxable. In case your taxable earnings is lower than ₹2.5 lakh, however you have got paid TDS on dividends, submit Kind 15G or Kind 15H for people over 60 years previous to inform the corporate or the share registrar and switch agent of mutual funds.

If the PAN just isn’t submitted, the TDS fee can be 20%. If a person’s earnings, which incorporates the dividend earnings is lower than INR 2.5 lakh, it isn’t taxable. In case your taxable earnings is lower than ₹2.5 lakh, however you have got paid TDS on dividends, submit Kind 15G or Kind 15H for people over 60 years previous to inform the corporate or the share registrar and switch agent of mutual funds.

Nirav Karkera, Head of Analysis, Fisdom

Dividends are taxable by the hands of the investor whereas a TDS of 10% is relevant on dividend payouts exceeding INR 5,000 in a monetary 12 months. If a person’s complete earnings together with the dividend earnings is beneath the non-public earnings tax exemption restrict, they will submit the 15G/15H, as relevant, to keep away from TDS.

Nirav Karkera, Head of Analysis, Fisdom

Dividends are taxable by the hands of the investor whereas a TDS of 10% is relevant on dividend payouts exceeding INR 5,000 in a monetary 12 months. If a person’s complete earnings together with the dividend earnings is beneath the non-public earnings tax exemption restrict, they will submit the 15G/15H, as relevant, to keep away from TDS.