DEDUCTIION OF TAX AT SOURCE ON DIVIDEND
We wish to inform you that the Board of Directors (the "Board") of your Company had, at their meeting held on May 7, 2021 recommended Final Dividend of Rs. 3.00 per equity share having nominal value of Re.1 each for the financial year ended March 31, 2021.
The Final Dividend, as recommended by the Board, if approved at the 46th AGM, will be paid to the shareholders holding equity shares of the Company, either in electronic or in physical form as on the book closure (which is from August 2, 2021 to August 6, 2021).
The shareholders are requested to update their PAN with the Company/ RTA (in case of shares held in physical mode) and depositories (in case of shares held in demat mode).
A Resident individual shareholder with PAN and who is not liable to pay income tax can submit a yearly declaration in Form No. 15G/15H, to avail the benefit of non-deduction of tax at source by email to the Company`s RTA at
einward.ris@kfintech.com or upload the documents through the link
https://ris.kfintech.com/form15/forms.aspx?q=0 by August 9, 2021. Shareholders are requested to note that in case their PAN is not registered, the tax will be deducted at a higher rate of 20%.
Non-resident shareholders can avail beneficial rates under tax treaty between India and their country of residence, subject to providing necessary documents i.e. No Permanent Establishment and Beneficial Ownership Declaration, Tax Residency Certificate, Form 10F, any other document which may be required to avail the tax treaty benefits by sending an email to the Company or its RTA at email address mentioned above. The aforesaid declarations and documents need to be submitted by the shareholders latest by August 9, 2021.
As provided in section 206AB, tax is required to be deducted at the highest of following rates in case of payments to specified persons:
- at twice the rate specified in the relevant provision of the Act; or
- at twice the rate or rates in force; or
- at the rate of 5%.
Where sections 206AA and 206AB are applicable simultaneously i.e. the specified person has not submitted the PAN as well as not filed Income Tax returns; the tax shall be deducted at the higher of the two rates prescribed in these two sections.
The term ‘specified person’ as defined in sub section (3) of section 206AB of the Act means a person who satisfies the following conditions:
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A person who has not filed the income tax return for two previous years immediately prior to the previous year in which tax is required to be deducted, for which the time limit of filing of return of income under section 139(1) of the Act has expired; and
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The aggregate of TDS and TCS in his case is ₹50,000 or more in each of these two previous years.
The non-resident who does not have the permanent establishment is excluded from the scope of a specified person.
These provisions are effective from July 01, 2021. The Company will be relying on the information verified from the utility available on the Income Tax Dept website.
In case any shareholder qualifies as specified person based on information as accessed from Government Portal, higher rate of TDS will apply.
The applicable Tax Deduction at Source (TDS) provisions under the Act for Resident and Non-Resident shareholder categories are as follows (subject to 206AB):
For resident shareholders:
For resident shareholders, generally, the tax will be deducted at source (TDS) under Section 194 of the Act @ 10% on the amount of dividend declared and paid by the Company during FY 2021-22 provided Permanent Account Number (PAN) is provided by the shareholder. If PAN is not submitted, TDS would be deducted @ 20% as per Section 206AA of the Act.
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Resident individual shareholders:
No tax shall be deducted on the dividend payable to resident individuals if -
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Total dividend to be received by them during the Financial Year 2021-22 does not exceed Rs. 5,000/-
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The shareholder provides a written declaration in prescribed Form 15G (applicable to any person other than a Company or a Firm) / Form 15H (applicable to an Individual above the age of 60 years), subject to eligibility conditions being met.
Blank Form 15G and 15H can be downloaded from the link given at the end of this communication
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Resident Shareholders other than individuals:
In case of a certain class of resident shareholders other than individuals who are covered under provisions of Section 194 or Section 196 or Section 197A of the Act, no tax shall be deducted at source ('nil rate') provided sufficient documentary evidence thereof, to the satisfaction of the Company, is submitted. This illustratively includes providing the following:
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Insurance Companies: Public & Other Insurance Companies, a Self-declaration that it has a full beneficial interest with respect to the shares owned by it along with PAN.
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Mutual Funds: Self-declaration that they are specified and covered under section 10 (23D) of the Act along with a self-attested copy of PAN card and registration certificate.
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Corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income: - Self-declaration specifying the specific Central Act under which such corporation is established and that their income is exempt under the provisions of Act along with a self-attested copy of the PAN card and registration certificate.
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Other Resident Non-Individual Shareholders: Shareholders who are exempted from the provisions of TDS as per Section 194 of the Act and who are covered u/s 196 of the Act shall also not be subjected to any TDS, provided they submit an attested copy of the PAN along with the documentary evidence in relation to the same.
Application of Nil rate at the time of tax deduction / withholding on dividend amounts will depend upon the completeness and satisfactory review by the Company, of the documents submitted by such shareholders.
For Non-resident shareholders or foreign companies, Foreign Institutional Investors ("FII") and Foreign Portfolio Investors ("FPI"). ('non-resident payee')
Tax is required to be withheld in accordance with the provisions of Section 195 of the Act at applicable rates in force. As per the said provisions, the tax shall be withheld @ 20% plus applicable surcharge and cess on the amount of dividend payable. However, as per Section 90 of the Act, a non-resident payee has the option to be governed by the provisions of the Double Tax Avoidance Agreement (DTAA) between India and the country of tax residence of the shareholder, if they are more beneficial to the shareholder. For this purpose, i.e. to avail the DTAA benefits, the non-resident shareholder will have to provide the following:
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Self-attested copy of Permanent Account Number (PAN Card), if any allotted by the Indian Income Tax authorities;
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Self-attested copy of Tax Residency Certificate (TRC) obtained from the tax authorities of the country of which the shareholder is resident;
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Self-declaration in Form 10F (available at the end of this communication), if all the details required in this form are not mentioned in the TRC;
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Self-declaration by the non-resident payee containing such particulars/ confirmation as would be imperative to be governed by and/ or avail benefits, if any, under the applicable DTAA (draft format available at the end of this communication.)
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- Self-declaration by the non-resident shareholder of meeting DTAA eligibility requirement and satisfying beneficial ownership requirement.
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- Non-resident having PE in India would need to comply with provisions of section 206AB of the IT Act).
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- In case of Foreign Portfolio Investors, self-attested copy of SEBI registration certificate.
In case of shareholder being tax resident of Singapore, please furnish the letter issued by the competent authority or any other evidences demonstrating the non-applicability of Article 24 - Limitation of Relief under India-Singapore Double Taxation Avoidance Agreement (DTAA).
Application of beneficial DTAA rates at the time of tax deduction / withholding on dividend amounts will depend upon the completeness and satisfactory review by the Company, of the documents submitted by the non-resident payee.
Notwithstanding anything contained herein, where any shareholder is a tax resident of any country or territory notified as a notified jurisdictional area under Section 94A(1) of the Act, tax will be deducted at source at the rate of 30% or at the rate specified in the relevant provision of the Act or at the rates in force, whichever is higher, from the dividend payable to such shareholder in accordance with Section 94A of the Act.
For Resident as well as non-resident shareholders
Notwithstanding anything contained above, in the case where the shareholders provide a certificate under Section 197 of the Act for lower / NIL withholding of taxes, the rate specified in the said certificate shall be considered based on submission of self-attested copy of the same.
Shareholders holding shares in physical form are requested to update their PAN details with the Company.
For Shareholders having multiple accounts under different status / category:
Shareholders holding shares under multiple accounts under different status / category and single PAN, may note that, higher of the tax as applicable to the status in which shares held under a PAN will be considered on their entire holding in different accounts.
Summary of TDS Rates
Subject to what is stated above, the rate at which taxes are to be deducted at source based on the category of shareholders, are as under:
|
Category of shareholder |
Rate of TDS |
|
Resident Shareholder* |
|
Shareholders providing Form 15G/15H |
nil |
|
If Dividend income < Rs. 5,000 |
nil |
|
If Dividend income > Rs. 5,000 |
10% in case where PAN is provided / available
- 20%, in other cases where PAN is not provided / not available |
|
Non - resident shareholders |
|
Non-resident Shareholders |
**20% or lower rate as mentioned in tax treaty, if the applicable details / documents are satisfactorily provided as aforementioned |
* Any shareholder who is specified person within law, a higher rate will apply. The information for specified person will be taken from Govt of India – CBDT Portal.
**All the above referred tax rates where domestic law is applicable, shall be duly enhanced by the applicable surcharge and cess.
Kindly note that the aforementioned documents should be emailed to KFin Technologies Private Limited, the Registrar and Transfer Agent ("
KFin") of the Company, at
einward.ris@kfintech.com. The aforementioned documents can also be uploaded through the link-
https://ris.kfintech.com/form15/forms.aspx?q=0 No communication on the tax determination / deduction shall be entertained after 9th August, 2021.
In case tax on dividend is deducted at a higher rate in the absence of receipt of the aforementioned details / documents, you would still have the option of claiming refund of the excess tax paid at the time of filing your income tax return. No claim shall lie against the Company for taxes so deducted at higher rate.
Copies of the TDS certificate will be emailed to you at your registered email ID in due course, post payment of dividend.