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Dividend tax date

11 October 2023

Say if I own some shares in a company and it announces a dividend with record date as 15 March 2023 and amount got credited in may 1 2023, should I have to consider this income for FY23 or FY24?

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8 Replies

SANJAY (CA in Practice) (32 Points)
Replied 11 October 2023

Dividend is taxable in Income from Other sources. The tax liability is considered depending of method accounting followed by assessee. In case of Mercantile basis of accounting, dividend is taxable in FY 22-23. In case of Receipt basis menthod of accounting , dividend is taxable in FY 23-24.

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Sidharth Chandrasekar (10 Points)
Replied 11 October 2023

I am a salaried employee and has some stock market investment. I file tax in ITR 2. Does these different types of accounting applies for ITR 2 also?

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 11 October 2023

No...
The Company books the dividend in March 23.
So, The dividend income raised You on March and it will be shown in Fy 22-23.

Receivable is accountability based on payment of receipts.

SANJAY (CA in Practice) (32 Points)
Replied 11 October 2023

Receipt basis method of accounting is allowed for Individuals. However the method of accounting followed must be consistent. And in general taxpayers do follow accrual basis method accounting, so dividend can be shown in FY 23.

And for avoiding mismatch it is better to show income of dividend when the expense is considered by company.

Moreover the dividend income can be traced from 26AS. So income can be shown as per 26AS considering the relevant financial year at which 26AS reflects the dividend income.