The tax authorities deducted tax on dividend from mutual funds. I want to know which form should be used for filing (ITR1 or ITR2). I would also like to know the exemption limit for dividend from mutual funds.

Can we file with ITR1 under income from other sources and show the dividend amount?

Please clarify.

Ans: For FY 22-23, ITR forms yet to be notified and some major changes are expected. So wait till April 2023. For FY 21-22, person with salary, interest and dividend can use ITR 1 (subject to other conditions like income should be less than 50 lacs, person should be resident etc).

Ans: Dividend income is taxable under the head Income from other sources. Tax rate will depend on total income and tax regime opt during the year.

Ans: Dear Rajesh,

Firstly, I appreciate your diligence in managing your taxes. Now, coming to your query, the choice between ITR-1 and ITR-2 depends on the nature of your capital gains.

ITR-1, also known as Sahaj, is for individuals with income up to Rs. 50 lakh from salary, one house property, other sources (interest, etc.), and agricultural income up to Rs. 5,000. However, it does not allow you to report capital gains.

On the other hand, ITR-2 is for individuals and HUFs not having income from profits and gains of business or profession. It includes the provision to report capital gains.

In your case, since you have capital gains from the sale of mutual funds, even if it's less than the taxable limit, it would be more appropriate to file ITR-2. The TDS that has been deducted can be claimed as a refund in your return if your total income is below the taxable limit.

Please consult with a tax professional or chartered accountant to ensure you're following the correct procedure as per the latest tax laws.

Remember, it's always better to be accurate in your tax filings to avoid any future discrepancies or issues with the tax department.

I hope this helps.

Best Regards

Ans: In case person is earning income from mutual fund (which was kept as investment), ITR 2 is required to file for showing income from capital gain.