Any dividend revenue from shares is taxable
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Is dividend revenue accrued from shares to a non-resident Indian taxable?
—Name withheld on request
Effective FY21 and onwards, any dividend revenue from shares of an Indian firm is taxable in India. In case of a shareholder qualifying as ‘non-resident’ in India below the revenue tax legislation, dividend revenue is taxable at 20% plus relevant surcharge and 4% well being and schooling cess on a gross foundation. Thus, the relevant tax charge on dividend revenue for a ‘non-resident’ ranges between 20.8% and 28.5% relying on the extent of complete revenue and surcharge.
In case of a shareholder qualifying as a ‘resident’ in India, dividend revenue is taxable at relevant slab charges.
Any profit below the double taxation avoidance settlement (DTAA) between India and the opposite nation could also be explored individually to keep away from double taxation or get a decrease charge. The firm will withhold tax on dividend both at 20% plus relevant surcharge and 4% well being and schooling cess or at a charge below DTAA, whichever is decrease.
My relative acquired some quantity within the NRI account right here in FY21 and the identical was used to repay debt and has no common transaction. Is my relative required to file an revenue tax return for the desired FY?
—Name withheld on request
Under the Indian revenue tax legislation, a person is required to file an revenue tax return if the gross taxable revenue exceeds the utmost quantity not chargeable to revenue tax. For FY21, the utmost quantity not chargeable to revenue tax is ₹2.5 lakh.
However, for the needs of figuring out the edge restrict of ₹2.5 lakh, the gross taxable revenue ought to be computed earlier than giving impact to the deductions below Chapter VI-A (akin to below Section 80C, 80D and so forth) or capital positive factors rollover exemptions (like Section 54, 54EC, 54F, and so on).
Even if the gross taxable revenue is under ₹2.5 lakh, the legislation has been not too long ago amended for obligatory furnishing of revenue tax return, in case a person (amongst others): 1. Has deposited an quantity exceeding ₹1 crore in a number of present accounts maintained with a financial institution throughout the FY; 2. Has incurred expenditure of an quantity exceeding ₹2 lakh for himself or every other individual for journey to a international nation throughout the FY; 3. Has incurred expenditure of an quantity exceeding ₹1 lakh in the direction of the consumption of electrical energy throughout the FY.
Sonu Iyer is tax companion and folks advisory providers chief, EY India.
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