How to calculate and pay tax on income from dividends and savings bank interest

Hi 

You may carry out the calculation of Advance Tax as follows:

1. Estimate your total income from all sources earned from 1st April- 31st March of the financial year for which you are doing the advance tax calculations.
2. Subtract all eligible deductions and exemptions.
3. Compute tax on such Income as per the tax regime opted by you.
4. 
   Reduce the amount of tax paid by way of TDS/TCS.
   

Further as regards the Cess and surcharge, yes you have to add.

Therefore you have to compute you total tax liability on the estimated income for the year and then pay advance tax accordingly. 

I hope this resolves your query. please feel free to reach out for any further clarification.

Thanks 

- Advance tax is payable in four installments i.e. 15% upto 15th June, 45% upto 15th sep., 75% upto 15th Dec and 100% upto 15th March.

- Calculate estimated total income and tax payable for the entire FY 2023-24 at the time of payment of each installment of advance tax. Tax liability on salary income is covered by TDS deduction by employer. You can get the figure of total salary income and TDS from the projected tax computation sheet. No TDS is deducted on saving bank interest but deduction u/s 80TTA (up to Rs.10k ) is available. No TDS is deducted on capital gain income. Again if it is a short term capital income u/s 111A then ii would be taxable at special rate of 15% and if it is a LTCG under 112A then benefit of exemption of Rs.1 lac is available and remaining LTCG would be taxable at special rate of 10% without benefit of indexation. TDS @ 10% is deductible on dividend income if aggregate amount of dividend for the financial year exceeds Rs.5k.

- Also consider current year and brought forward losses

For detailed discussion you may opt for phone consultation

Hi 

So you may refer to the projected Income computation sheet for the respective FY from your employer wherein the TDS on salary would be shown,you have to consider the same along with any TDS already deducted on your dividend income or any other income.

Please also note that no TDS is deducted on savings interest,further deduction is available under Section 80TTA for savings interest upto Rs.10,000/-  

Hope you find the information helpful, if yes do rate it and provide your valuable feedback for my improvement.

Thank you.

Hello,

Calculating advance tax can be a bit complex, but let's break it down step by step based on the information you've provided.

Identify your income sources and tax rates:

1. • Dividend Income: You've received dividend income on which 10% TDS has already been deducted.
   • Savings Bank Interest: You've received interest income on which 10% TDS has already been deducted.

Calculate Total Estimated Income for FY 2023-24: Estimate your total income for the entire financial year 2023-24, considering all sources, such as salary, dividend income, and savings bank interest.

Calculate Tax Payable: Calculate the tax liability on your estimated total income for the year, including the dividend income and savings bank interest. Apply the appropriate tax rates for each type of income:

Dividend income: Calculate the tax on dividend income at your applicable slab rate (30% in your case), and then reduce the TDS already deducted at 10% from this amount.

Savings bank interest: Apply the appropriate tax rates considering deductions under section 80TTA (up to Rs. 10,000).

Calculate Advance Tax for Each Installment:

• First Installment (15% by 15th June): Estimate 15% of the total tax liability and pay this amount by 15th June.
• Second Installment (45% by 15th September): Estimate 45% of the total tax liability, subtract the first installment already paid, and pay the remaining by 15th September.
• Third Installment (75% by 15th December): Estimate 75% of the total tax liability, subtract the sum of the first and second installments already paid, and pay the remaining by 15th December.
• Fourth Installment (100% by 15th March): Estimate 100% of the total tax liability, subtract the sum of the three installments already paid, and pay the remaining by 15th March.

Consider Cess and Surcharge: Calculate education cess (4%) and any applicable surcharge on the total tax liability .Add the calculated cess and surcharge to your total tax liability.

Account for Losses: If you have any brought-forward losses from previous years, adjust them against your current year's income to reduce your taxable income.

The above steps provide a general framework based on the information you've provided, but individual circumstances may vary.

Hi..

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CA Rakesh Jain