Save TDS on Mutual Fund Dividend: If you have also invested in a dividend paying product like a mutual fund or a stock, then it is very important to know about Form 15G and Form 15H. With the help of these forms, investors are able to save TDS (tax deduction and source) if their tax liability is zero. Mutual fund investors have the option to save TDS as the dividend that comes into the hands of investors has become taxable since April 1, 2020.
Finance Minister Nirmala Sitharaman abolished the Dividend Distribution Tax (DDT) while presenting the general budget for the financial year 2021-22. Instead, he imposed a tax deducted at source (TDS) of 10 per cent on the dividend to be distributed to shareholders or unitholders on behalf of the company or mutual fund. If there is no PAN, TDS will be cut by 20 per cent.
How much will TDS be deducted
The proposal to impose TDS in the general budget will apply not to the earnings from mutual fund units, but to the dividend to be distributed by the funds. If you earn more than Rs 5,000 annually from the dividend, then 10% TDS will be charged. TDS will be deducted even if the dividend is reinvested. Also, it has to be given in the income tax return. For this, section 194K has been added to the Income Tax Act.
Form 15G and 15H will help
Those under 60 years can take advantage of Form 15G. At the same time senior citizens can save TDS through Form 15H. TDS can be saved on dividend through Form 15G and 15H. If you have deducted TDS on dividends received from shares or mutual funds, you can submit Form 15G or Form 15H directly to the company for tax deduction. At the same time, in case of dividend payout option on mutual fund schemes, you can submit this form directly to the Asset Management Company (AMC) or their Registrar and Transfer Agent (RTA).
Form 15G or Form 15H can be submitted online by visiting the websites of companies, AMCs or RTAs. For this, you have to fill your details, eg PAN number, Fund house (AMC) name, Folio number etc.
Who can submit the form
According to the Income Tax Act, people can submit 15G or Form 15H only, whose income is less than the exemption limit. Income up to Rs 2.5 lakh is adopted for people below 60 years of age. At the same time, tax liability is not made on income up to Rs 3 lakh for people above 60 years and below 80 years and up to Rs 5 lakh for those above 80 years of age.
TDS details now available on Form 26AS
Details of dividend income and TDS will now be available on the new format of Form 26AS, which will make it easy to file Income Tax Return (ITR). If the total income of the taxpayer is less than Rs 2.5 lakh and it includes dividend income, then the income from the dividend will not be taxed.