ITR Filing 2025: Income Tax Return (ITR) filing for assessment year 2025-26 has started. If you are filing ITR by yourself or getting it to someone, then it is necessary to fill all the information correctly. Especially, if you invest in the stock market and you earn from dividend, then it should be shown in ITR. In case of not doing so, the notice of income tax can come.
Let us know from experts how to report dividend income in ITR correctly. Also, how is tax on it.
ITR-1 and ITR-4 will not work
Tarun Garg, director of Deloite India, says, “Dividend income should be shown in the schedule of ITR form on Gross Value before cutting TDS.”
He clarified that taxpayers who get dividend from reits, invitces, foreign companies or alternative investment funds (AIFs) cannot use ITR-1 or ITR-4. In such cases only ITR-2 or ITR-3 will be valid.
ITR-2 is for individuals who have no business or professional income, but they receive dividends from foreign sources or AIFs. ITR-3 should be used by those who earn from business or profession.
Quarterly breakup and TDS matching is necessary
In the return, it is mandatory to show dividend income with a breakup on a quarterly basis. Its purpose is to correctly calculate the interest charged on advance tax under Section 234C based on irregular flow of income.
If the TDS is cut on the dividend, its information will have to be filled according to the Form 26AS in the TDS schedule of ITR, so that there is no disturbance.
Additional revelations on foreign dividend income
Those receiving dividends from foreign companies will have to make some extra disclosures. According to OP Yadav, a tax expert of Prosperr.IO and former Principal Income Tax Commissioner, ‘Foreign Dividand Income has to report in ITR’s Schedule FSI (Foreign Source Income). If foreign tax credit is being claimed, then it is also necessary to fill the schedule tr.
In addition, it is mandatory to inform such taxpayers about their foreign holdings in Schedule FA (Foreign Assets).
Reporting AIF and DIMD Dividend
If dividend income is available through pass-through AIFs such as AIFs, it should be shown in Schedule PTI. This schedule is available only in ITR-2 and ITR-3.
Yadav also states that Deemed Dividend under Section 2 (22) of the Income Tax Act is considered taxable in the same year when it is declared or distributed. It is also necessary to show it under ‘income from other sources’.
Notice can be received on wrong reporting
Expert emphasized that dividend income information given in the return should be matched to Form 26AS and Annual Information Statement (AIS). In the case of incorrect or incomplete reporting, a notice or detailed investigation may be faced by the tax department.
In such a situation, if you want to avoid the notice of the Income Tax Department, then show the dividend income correctly. If necessary, you can also consult a certified expert.
Also read: Crypto tax notice: tax notice to thousands of traders on crypto income; This is how to report in ITR, otherwise there will be danger of getting trapped