Members may note that Pursuant to the provisions of the Income Tax Act, 1961 (‘the Act’), dividends p aid or distributed by the Company shall be taxable in the hands of the shareholders. Therefore, we are required to deduct tax at source (TDS) at the time of making payment of the said Interim Dividend.
The rate of TDS would vary depending on the residential status of each shareholders(s), and the supporting documents submitted by them and accepted by the Company in this regard. Accordingly, the Interim Dividend will be paid after deducting tax at source (TDS) in the following manner.
A. For Resident Shareholders
Tax shall be deducted at source under Section 194 of the Act, as under:
| 1 | Shareholders having valid Permanent Account Number (PAN) | 10% or as notified by the Government of India% |
| 2 | Shareholders not having PAN / invalid PAN | 20% or as notified by the Government of India |
| 3 | Shareholders who have not filed their income tax returns for the previous two financial years for which due date u/s 139(1) has expired and aggregate of TDS in their case is Rs. 50,000/- or more in each of these two previous years. | 20%* |
However, no tax shall be deducted on the dividend payable to resident individual shareholders, if the total dividend to be received by them including this interim dividend payment during financial year 2021-22 does not exceed Rs. 5,000/-, and also in cases where shareholders provide Form 15G (applicable for individuals below 60 years of age earning dividend income)/Form 15H (applicable for individuals above 60 years of age earning dividend income) subject to conditions specified in the Act.
Click here to download Form 15G
Click here to download Form 15H
Resident shareholders may also submit any other document as prescribed under the Act to claim a lower/Nil withholding of tax. PAN is mandatory for shareholders providing Form 15G/15H or any other document as mentioned above.
B. For Non-resident Shareholders
Tax is required to be withheld in accordance with the provisions of Section 195 (*) and other applicable sections of the Act, at the rates in force. The withholding tax shall be at the rate of 20% (plus applicable surcharge and cess) or as notified by the Government of India on the amount of dividend payable.
However, as per Section 90 of the Act, non-resident shareholders have the option to be governed by the provisions of the Double Tax Avoidance Agreement (DTAA) read with Multilateral Instrument (“MLI”) between India and the country of tax residence of the shareholder, if such provisions are more beneficial to them. For this purpose, i.e., to avail the benefits under the DTAA read with MLI, non-resident shareholders are required to provide the following documents: