How to file TDS returns for dividend income?

Posted In | Finance | Accounting Software | India Accounting Tax

Tax Deducted at Source, commonly known as TDS, is a means of collecting income tax by the government of India. It is governed by the Central Board for Direct Taxes (CBDT) and is a part of the Indian Revenue Service (IRS). Dividend income refers to the payout received from your investments in a company's stocks or mutual funds. While the company pays dividends from its profits, it is liable to deduct TDS before making the payment to the shareholders. Therefore, it’s essential for investors to file TDS returns correctly to avoid any legal complications or penalties.

 

Step 1: Understanding the Process

The first step to filing your TDS returns for dividend income is understanding how the process works. TDS is deducted at the time of payment, and the company or the payer is responsible for deducting this tax at the appropriate rates. The deducted tax is then deposited with the government. The taxpayer should receive a TDS certificate, known as Form 16A, from the company, which contains details of the tax deducted and deposited.

 

Step 2: Gathering Essential Documents

After understanding the process, the next step involves gathering all the essential documents. These include the PAN card, TDS certificates (Form 16A), and the details of the dividend income. The taxpayer should also keep handy bank statements and a copy of the previous year’s return (if applicable).

 

Step 3: Filing TDS Returns Online

To file TDS returns online, head over to the Income Tax Department's official website. Here, you can find the appropriate form for filing the TDS return. For dividend income, the correct form is IT-26Q. Fill out the form with all the required details and submit it online. Make sure to verify it either using a digital signature, Aadhaar-based OTP, or Electronic Verification Code (EVC).

 

Step 4: Tracking TDS Return Status

After filing the return, one can track the status of the TDS return on the same website. It usually takes around one week for the return to get processed. The taxpayer will receive a notice if there are any mistakes or discrepancies in the return filed.

 

Filing TDS returns for dividend income is an essential practice for all taxpayers. It ensures compliance with tax laws and can also help in getting a refund in case of excess tax payment. By following the correct procedure and maintaining the necessary documents, one can easily file TDS returns and avoid any penalties or legal issues.