@av2799 ,
Namaste ji
(a) First on TDS. Because TDS is essentially an "estimated withholding", the use the amount for US Foreign Tax credit is a bit iffy. The reason is that if the final Tax liability ( i.e. when the ITR is finalized and accepted by IT Department ) is different from the TDS ( often likely ), you may have to file an amended US federal return to recognize the change. Therefore , if at all possible it is best to wait past the filing of ITR in India.
(b) Dividend and Interest earnings should generally be recognized just like you would for domestic interest and dividend earnings --- the difference of course being that you do not have corresponding 1099s ( INT or DIV). You would enter these incomes under "personal income " tab and select the correct type from the drop down list of incomes.
(c) Any Capital gain reporting is also just as if these assets were domestic. Note that the gain/loss computation here is under the US laws ( and therefore the gain/loss figure may be different than that shown on your Indian ITR ). Depending on the type of asset and the use , this would be either forms 4797 or 8949, on to Schedule-D and then gain/loss showing up on form 1040.
(d) For claiming Foreign Tax Credit, go to "Deductions & Credits " tab, select "I will choose what I work on " and then from the list of credits etc. select Foreign Tax Credit. This will walk you through filling out the form 1116. The questions are a bit abstruse and often do not result in what you want to do. But what you are trying to do (1) is to select Passive Category ; (2) Enter the gross income from the Foreign Source --- this generally should be the gross amounts for Interest and Dividend -- that is do not deduct any TDS or any adjustments / fees etc. and for Capital Gain/Loss should be the amount per US computation; (3) Enter the Final ( or TDS ) taxes paid to India on these incomes.
Form 1116 , while recognizing the full amount of taxes paid, will compute the allowable credit for the year to be lesser of actual paid and US taxes on the same doubly taxed income. The rest ( if any ) is banked , available to carried back one year or forward for 10 years.
The above is based on article 25 of the US-India Tax treaty. There are articles dealing with maximum taxation rates on Dividend and Interest ( these are achieved by adjusting the foreign source income ) but I am ignoring these adjustments because US generally does not have a fixed tax rate ( for all filers ) for dividend and/or interest income. But it may become germane for very high earners where the marginal rate is say 20% or more .
I don't know if I have answered your query. Please add your response to the PM that you had sent .
Namaste ji
pk
