There have been many changes in the rules of Income Tax Return (ITR) from the financial year 2020-21. On one hand, filing ITR has become very easy for those earning only salary.
At the same time, reporting of dividend income has been made mandatory on a quarterly basis. Before the financial year 2020-21, the taxpayer was not required to pay any tax on dividend income up to Rs 10 lakh in any year as the institution had to pay Dividend Distribution Tax (DDT) before paying the dividend. On dividend income above Rs 10 lakh, the taxpayer had to pay tax at the rate of 10 per cent.
Now from the financial year 2021, these rules have changed and the dividend distributed by the institute has been brought under the tax net. Apart from this, under the new rules, if the dividend is received in a financial year exceeding five thousand rupees, then it will be the responsibility of the company to deduct TDS at the rate of 10 percent.
Must be shown as income from other sources
Before the financial year 2021-22, income from dividend was disclosed under exempted income, but now under the new rules, it will have to be reported under income from other sources. The taxpayer has to pay advance tax in the same quarter in which the dividend is received. Tax consultant K.C. Goduka says that for the calculation of interest on default in payment of advance tax, the information of dividend received in the entire financial year will have to be given on quarterly basis.
They say that earlier it was not possible to disclose the dividend income in advance, so there was no penalty for non-payment of advance tax on it. However, from this year onwards, the Income Tax Department has made it mandatory for all institutions to provide the information about the dividend paid to the department and this information is pre-filled by the taxpayer. In such a situation, when you get the pre-filled data in ITR, then go through all the information given in it carefully.
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