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investments, taxes, finance & more.
Bytes - Your weekly dose of
investments, taxes, finance & more.
Hiral Vakil
Taxpayers always get confused between the financial year (FY) and assessment year (AY) for which they are filing ITR. These terms are widely used in the context of ITR filing, TDS Return filing, and payment of income tax. Hence it is important to understand the difference between Financial Year and Assessment Year.
In simple terms, the financial year is the year which begins on 1st April and ends on 31st March. It is the year in which income is earned by the taxpayer. FY is a term widely used in Form 16, Salary Payslips, Loan repayment documents, etc of a taxpayer.
Term Assessment year is widely used in the context of ITR filing and payment of income tax. AY is a year immediately following the financial year. The taxpayer needs to file ITR not in the year in which he/she earns the income but after the end of that year i.e, in the assessment year.
Let’s take an example to understand the difference between AY and FY better: Mr. Ajay is a fresher who started a job in a company on 7th July 2018 and has worked with the same company till 31st March 2019. In this case, Financial Year (FY) is 2018-19 for Ajay i.e, the year in which income is earned by him. And Assessment Year (AY) is 2019-20 i.e, the year in which Ajay will file his ITR.
|
Period |
Financial Year(FY) |
Corresponding Assessment Year(AY) |
|
1st April 2017- 31st March 2018 |
FY 2017-18 |
AY 2018-19 |
|
1st April 2018- 31st March 2019 |
FY 2018-19 |
AY 2019-20 |
|
1st April 2019- 31st March 2020 |
FY 2019-20 |
AY 2020-21 |
FY 2018-19 ends on 31st March 2019. Hence return for FY 2018-19 can be filed only after 31st March 2019. Taxpayers can file their ITR from April 2019, once the income tax department enables the e-filing of ITR on the income tax e-filing portal. The due date for filing ITR for FY 2018-19 is 31st July/ 30th September 2019.
AY 2019-20 starts on 1st April 2019 and ends on 31st March 2020. AY 2019-20 means FY 2018-19 and ITR for AY 2019-20 will be filed on or before 31st July/ 30th September 2019 for income earned in FY 2018-19.
Generally, ITR filing starts in April month of Assessment Year. Income Tax department notifies the commencement of e-filing on its website under the News and Updates section.
Hey @TeamQuicko
Thanks for the blog! Just one quick question - Why do we have to report a quarterly breakdown of Dividend Income under IFOS?
Thank you!
I had received dividend recently but I had noticed that TDS had been deducted. any idea as to why has it happened and is there a way I can claim this TDS?
Hey @HarshitShah
After the introduction of Budget 2020, dividend income is now taxable in the hands of the shareholder; and is also subject to TDS at 10% in excess of INR 5000 u/s 194 & 194K. Foreign Dividend is taxable at slab rates. TDS is not applicable to such dividends. The taxpayer should report such income under the head IFOS in the ITR filed on the Income Tax Website.
Hope this helps!
Hey @HarishMehta
Yes, dividend income is now taxable from FY 2021-22 onwards and it has to be reported under the head of IFOS.
You can read more about it here:
Hi @ameyj
The amount of TDS deducted shall reflect in your Form 26AS only and it will also reflect the name of the deductor.
Using the name of the deductor you can find out on which share you have received the dividend and you can also cross-check the same in your bank statement.
Yes, you are right, TDS is to be deducted when the dividend paid exceeds 5000 INR in a financial year. However, the 5,000 INR limit pertains to all the dividends an individual gets in a year, or the total dividend per shareholder that a company pays out in a year, is left to interpretation, and hence registrars and share transfer agents (RTA) are not taking any chances and are deducting TDS even on small amounts.
Hope this helps
Hi @TeamQuicko
Consider that I have 10 shares each of 10 different Indian companies. Each of the 10 companies are declaring a dividend of INR 100 before the FY ends. Now I will be recieving 1000 as dividend from each company, thereby a total of 10,000.
The 5,000 dividend limit, is it applicable to each company / total dividend recieved by me in a year. If it is applicable to each company, then I would not attract TDS of 10% for dividend.
Also pl clarify, how would the company B know that I have got shares of Company A,C,D,E so on…
Hey @Abdul_Kaleem_shah
As per sec.194 of income tax act, TDS liability will arise when the amount of such dividend or the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, exceeds 5000 Rs.
Here, the term company not includes aggregate companies and hence limit of 5000 Rs. should be applicable to each company.
Here, you can read below article covering TDS on dividend income:
Since, it is purely based on interpretation and ambiguous as opinion vary from experts.
Thank you @Kaushal_Soni for your interpretation.
Hey @TeamQuicko
I tried to file ITR-3 via Quicko’s integration with Zerodha. While filing the ITR, I got an option to switch to the New Tax regime to save additional taxes.
Since I had some turnover from intraday and FnO (speculative/ business), am I eligible to switch to the new regime through Quicko while filing?
How do I fill the Form 10-IE? If I haven’t filled the form, would the portal preent me from filing returns altogether?
Also, once I get rebate (if opted for new regime) / pay dues (if opted for old regime), do I need to go through the hassles of replicating it on the new ITR portal (i.e manually answering the schedule sections)?
Kind regards
Hi @ChinmayB,
Yes, you can opt for the new tax regime. However, keep in mind in case a taxpayer has business income and they opt for the new tax regime, they can switch to the old tax regime only once.
If you opt for the new tax regime, you need to file Form 10-IE before filing the ITR
Here’s how you can file the Form 10-IE
When filing your ITR through Quicko, you do not need to enter details on the new ITR portal, since Quicko is a ERI (e-return intermediary) registered with the Income Tax Department.
Note: ITR filing will be enabled on Quicko in the coming week. So stay tuned for more exciting features!