Should you be making money from stock or mutual fund dividends, you might be wondering how much tax you should pay. One can find this simple with a dividends tax calculator. Based on the most recent guidelines, it rapidly displays on your dividend income the tax amount.
Dividend income is:
Dividend is what your mutual fund or share investments yield. Businesses grant it from their earnings to their owners. It’s a common approach to generate side money.
Is Indian dividend income taxable?
Definitely yes. Dividend income is totally taxable in the hands of the investor starting in April 2020. Companies used to pay Dividend Distribution Tax (DDT), but these days investors pay tax using their income tax slab. Therefore, you have to add whatever dividend you receive—500 or 5 lakh—to your income and pay taxes based on your slab.
Why Consult a Dividends Tax Calculator?
With the aid of a dividends tax calculator:
- Find out your dividend income’s tax payability level.
- Organize your taxes better.
- Steer clear of surprises right before filing ITR.
- Choose whether to make further dividend-paying stock investments or not.
How Does It Work?
The use of a dividends tax calculator is straightforward:
- Enter your total dividend income for the year.
- Select your income tax slab (5%, 20%, or 30%).
- The calculator displays the tax straight away.
An illustration
Given ₹30,000 as dividend income, your income falls into the 20% slab:
Tax = ₹30,000 × 20% = ₹6,000.
The calculator shows you this in seconds; this is your tax due.
Remarks to Remember
- Dividend income is added to your total income.
- If it exceeds ₹5,000 from a company or mutual fund, TDS (Tax Deducted at Source) of 10% is applied.
- You can get credit for TDS as you file your ITR.
- If their income is less than the taxable limit, senior citizens and others can file Form 15G/15H.
Conclusion Thought
A useful tool for proper tax planning is a dividends tax calculator, which also helps save time. Use the calculator to get an instant estimate and keep tax-ready instead of speculating or applying difficult calculations.
