Foreign dividends in Schedule OS: rate, quarter, and gross
August 2026 · 7 min read
ethro is a free tool that generates this exact report from your IBKR statements — not just a guide.
Generate your reportsA US dividend hits your Indian return in a specific place, at a specific rate, converted on a specific date, and split across specific quarters. Get any of those wrong and the return either overstates your tax or triggers interest you didn't expect.
Where it goes and how it's taxed
Foreign dividends are taxable under Income from Other Sources and reported in Schedule OS. There's no special rate and no concessional treatment — they're added to your total income and taxed at your slab rate. In the 30% bracket, a US dividend is taxed at 30% plus cess.
The only deduction available is interest expense incurred to earn the dividend, capped at 20% of the gross dividend income under Section 57. No other expenses — not brokerage, not platform fees, not currency conversion charges.
Report the gross, not what landed in your account
US dividends paid to Indian residents are subject to US withholding at source — typically 25% under the India–US treaty, assuming a valid W-8BEN is on file (without one, it's 30%).
You report the gross dividend, before withholding. Then you claim the US tax withheld as foreign tax credit separately, via Schedule FSI, Schedule TR and Form 67.
Reporting the net figure is a double error: it understates income and silently forfeits the credit — usually costing more than the understatement saves. See claiming foreign tax credit.
The exchange rate: preceding month-end
Under Rule 115, dividend income converts at the SBI TT buying rate for the last day of the month immediately preceding the month in which the dividend was paid.
A dividend paid on 15 August uses the 31 July rate. Not the 15 August rate, not the year-end rate, not an average.
Note this differs from Schedule FA, where balances and values use their own dates. Income follows Rule 115; balances follow their own date. Same portfolio, two conventions, both correct — more here.
The five-quarter breakup, and why it exists
Schedule OS requires dividend income to be split across five periods aligned to advance-tax installments. This isn't busywork — it drives Section 234C interest, which is charged on shortfalls in quarterly advance tax.
The split is by when the dividend was actually received, not when you discovered it or when you filed.
There's a specific relief worth knowing: no 234C interest is charged on a shortfall attributable to dividend income, provided you pay the full tax in the subsequent advance-tax installments. The logic is that you cannot forecast a dividend before it's declared. The relief only works if the quarterly breakup is filled in correctly — which is precisely why the schedule asks for it.
The period is April to March
Schedule OS runs on the financial year, unlike Schedule FA's calendar year. The practical trap: if you export only a January–December file from your broker, you will miss January to March dividends that belong in this year's return, and wrongly include the previous January to March.
Schedule OS vs Schedule FSI — you need both
These report the same rupee amount for different purposes, and filing only one is a common error:
| Schedule | Purpose |
|---|---|
| Schedule OS | Computes your actual Indian tax on the dividend |
| Schedule FSI | Reports the same income as foreign-sourced, to support the FTC claim |
| Schedule TR | Summarises taxes paid abroad, by country |
Schedule FSI does not tax anything. If you fill only FSI and skip OS, the income never enters your tax computation.
Verify before you rely on this. Indian rules on dividend taxation, advance-tax interest and foreign tax credit have changed repeatedly in recent years, and the Income-tax Act 2025 — in force from 1 April 2026 — renumbered sections, rules and forms wholesale (Form 67 becomes Form 44 for FY 2026-27 onward, for example) even where the substance carried forward. The rates, thresholds and conventions above reflect AY 2026-27 filings under the 1961 Act. Confirm the current position for your assessment year with your CA or on incometax.gov.in before filing — don't treat this page as settled law for a later year.
Frequently asked questions
At what rate is foreign dividend income taxed in India?
At your applicable slab rate, as Income from Other Sources. There is no concessional or flat rate for foreign dividends.
Do I report the dividend before or after US tax was withheld?
Before — report the gross amount. The US tax withheld is claimed separately as foreign tax credit through Schedule FSI, Schedule TR and Form 67. Reporting the net figure understates income and forfeits the credit.
Which exchange rate applies to a dividend?
The SBI TT buying rate for the last day of the month immediately preceding the month of payment, under Rule 115. A dividend paid on 15 August uses the 31 July rate.
Why does Schedule OS ask for a quarterly breakup of dividends?
Because it drives Section 234C advance-tax interest. There is also relief from 234C for shortfalls caused by dividend income if you pay in subsequent installments — but claiming it depends on the breakup being filled correctly.
Can I deduct expenses against dividend income?
Only interest expense incurred to earn the dividend, capped at 20% of gross dividend income under Section 57. Brokerage, platform fees and currency-conversion charges are not deductible.