ITR Filing FY2024-25: Don’t Miss These Crucial Details on Investment Income
The tax filing season for FY2024-25 (Assessment Year 2025-26) is underway, and with the deadline extended to September 15, 2025, for non-audited taxpayers, you have a bit more time to get things right. But don’t let that lull you into a false sense of security; accurately reporting your investment income, especially dividends, is critical to avoid penalties and legal headaches. Experts warn that misreporting or under-reporting can lead to interest, penalties, or even assessment notices from the Income Tax Department.
Dividend Income: What’s Changed and How to Report It
Gone are the days of tax-exempt dividend income. For FY2024-25, dividends you receive are fully taxable in your hands, whether they’re from Indian companies, mutual funds, or foreign entities. This includes not just direct profit distributions but also “deemed dividends” like loans to substantial shareholders, as per Section 2(22) of the Income Tax Act, 1961.
Where to Report Dividend Income
Generally, dividend income is taxed under “Income from Other Sources” and must be reported in Schedule OS of your ITR form.
Keep in mind these important details:
- Deductions: The only deduction you can claim is for interest expenses incurred to earn the dividend, and that’s capped at 20% of your total dividend income. No other expenses are allowed.
- Detailed Disclosure: You’ll need to provide a quarterly breakup of your dividend income. This helps in calculating any interest due under Section 234C of the Act.
- Foreign Dividends: If you’ve received dividends from foreign sources, these need to be disclosed separately. You may also be able to claim a Foreign Tax Credit (FTC) under applicable Double Taxation Avoidance Agreements (DTAA).
Understanding TDS on Dividends
Companies and mutual funds are required to deduct Tax Deducted at Source (TDS) on dividends.
- A 10% TDS is applicable if the dividend amount exceeds Rs. 10,000 in a financial year for a resident shareholder.
- If you don’t have a PAN, the TDS rate jumps to 20% as per Section 194 of the Act.
Crucially, you must report this TDS in the TDS Schedule of your ITR to claim credit for the taxes already deducted from your dividend income.
Verify Your Figures: Form 26AS and AIS are Your Best Friends
Before hitting submit on your ITR, it’s absolutely vital to cross-check your reported dividend income against the information available on the Income Tax Department’s portal.
- Form 26AS: This statement provides a summary of all tax deducted at source against your PAN.
- Annual Information Statement (AIS): The AIS is a more comprehensive document that includes details of various financial transactions, including dividends, interest, and stock market activities.
Any mismatch between your ITR and these official documents can trigger scrutiny or notices from the Income Tax Department. So, take the time to verify your actual dividend received with the data on the portal to prevent future hassles.
Extended Deadline, But Don’t Delay!
The Income Tax Department has extended the ITR filing deadline for FY2024-25 to September 15, 2025. While this gives you more time, it’s always advisable to file well in advance. Waiting until the last minute can lead to portal glitches and issues due to overcrowding.
Currently, the utilities for ITR-1 and ITR-4 forms are open for filing. However, if you need to file ITR-2 or ITR-3, you’ll have to wait a bit longer, as their utilities haven’t been released yet.
Got any questions about reporting your investment income for ITR FY2024-25? It’s better to be safe than sorry!