Deduction of tax at source from the Final Dividend

Deduction of tax at source from the Final Dividend for the financial year ended 31st March, 2022

The Board of Directors of the Company ('the Board') at the Meeting held on 18th May, 2022, as you are aware, have recommended Final Dividend @ Rs. 6.25 per Ordinary Share of Re. 1/- each for the financial year ended 31st March, 2022; the said dividend is in addition to the Interim Dividend of Rs. 5.25 per share declared by the Board on 3rd February, 2022 and paid on 4th March, 2022.

The Final Dividend, if declared at the 111th Annual General Meeting of the Company convened for 20th July, 2022, will be paid between 22nd July, 2022 and 26th July, 2022.

Pursuant to the Income-tax Act, 1961, dividend income is taxable in the hands of the shareholders, and the Company will be deducting tax at source (TDS), as applicable, from the aforesaid dividend.

 

I. Resident Shareholders

TDS will be deducted @ 10% on the amount of dividend payable where a valid Permanent Account Number (PAN) has been furnished by the resident shareholders to their respective Depository Participants (in case shares are held in dematerialised form) or to the Investor Service Centre (ISC) of the Company (in case shares are held in certificate form).

TDS will be deducted @ 20% i.e. at twice the applicable rate on the amount of dividend payable where the resident shareholders:

  • have not furnished valid PAN; or
  • are considered to be 'Specified Person' under Section 206AB of the Income Tax Act, 1961 i.e. a resident shareholder who has:
    • not filed return of income for the assessment year relevant to the 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 Income-tax Act, 1961 has expired; and
    • been subjected to tax deduction / collection at source aggregating to Rs. 50,000/- or more in the aforesaid previous year.
    The Central Board of Direct Taxes (CBDT) has prescribed the functionality for determining whether a person fulfils the conditions of being a 'Specified Person' or not. Accordingly, the Company will verify from the above functionality provided by CBDT whether any Shareholder of the Company qualifies as a 'Specified Person' prior to applying the relevant TDS rates.

Shareholders who are yet to furnish their PAN to their respective Depository Participants / ISC are therefore requested to do so immediately.

No TDS, however, will be deducted from dividend payable to:

(A) Individual Shareholders, if:-

  • the amount of dividend payable by the Company during a financial year does not exceed, in the aggregate, Rs. 5,000/-, or
  • their income is below the taxable limit and declaration is received by the Company from the shareholders in Form 15G (for individuals up to age of 60 years) or in Form 15H (for individuals above the age of 60 years).
Click here to download Form 15G
Click here to download Form 15H

 

(B) Insurance Companies (viz. LIC, GIC etc.), Mutual Funds and domestic Alternative Investment Funds, where the following documents complete in all respects are received by the Company from them.

 

Category of Shareholders Documents required
Insurance Companies
  1. A self-declaration that they are covered by the second proviso to Section 194 of the Income-tax Act, 1961 and has full beneficial interest with respect to the shares owned by it;
  2. Self-attested copy of registration certificate; and
  3. Self-attested copy of PAN.
Mutual Funds
  1. A self-declaration that they are governed by the provisions of Section 10(23D) of the Income-tax Act, 1961;
  2. Self-attested copy of registration certificate; and
  3. Self-attested copy of PAN.
Alternative Investment Funds (AIF)
  1. A self-declaration that the income of the AIF is exempt under Section 10(23FBA) of the Income-tax Act, 1961 and that they are governed as Category I or Category II AIF under the SEBI regulations;
  2. Self-attested copy of registration documents; and
  3. Self-attested copy of PAN.
Other non-individual resident shareholders
  1. A self-declaration that dividend receivable by them is exempt from tax under Section 196 or other relevant provisions of the Income-tax Act, 1961; and
  2. Self-attested copies of documents in support of the claim.

II. Non-Resident Shareholders

TDS will be deducted @ 20% (plus applicable surcharge and cess) or the Tax Treaty Rate, whichever is lower, on the amount of dividend payable to Foreign Portfolio Investors, Foreign Institutional Investors and other non-resident shareholders.

For availing the benefit of Tax Treaty Rate, the shareholders will be required to submit the following documents to the Company complete in all respects.

 

  • Self-attested copy of Indian Tax Identification Number (PAN), if any;
  • Self-attested copy of Tax Residency Certificate (TRC), covering the financial year 2022-23, issued by the tax authorities of the country of which the shareholder is a tax resident;
  • Form 10F, for the financial year 2022-23, duly filled up and signed;
    Click here to download Form 10F
  • A self-declaration primarily covering the following:
    • that the non-resident shareholder is eligible to claim the benefit of the respective Tax Treaty in the financial year 2022-23;
    • that the non-resident shareholder receiving the dividend income is the beneficial owner of such income; and
    • that the dividend income is not attributable / effectively connected to any Permanent Establishment (PE) or Fixed Base in India during the financial year 2022-23.
      Click here to download the self-declaration format
  • In case of shareholder being tax resident of Singapore, please furnish the letter issued by the competent authority or any other evidence demonstrating the non-applicability of Article 24 - Limitation of Relief under India-Singapore Double Taxation Avoidance Agreement (DTAA).

III. General instructions / information

(1) Submission of Tax Exemption Forms / documents for availing the benefit of Tax Treaty Rate, as applicable, by 5th July, 2022

The Tax Exemption Forms from resident shareholders and Forms & Documents from non-resident shareholders for availing the benefit of Tax Treaty Rate, as stated above, may be sent to ISC on or before 5th July, 2022 through the ITC Eform Portal at https://eform.itcportal.com. The Eform Portal is also accessible from the Company's corporate website www.itcportal.com under the section 'Investor Relations'.

The consideration of the aforesaid documents, including application of beneficial Tax Treaty Rate, where applicable, will depend on the adequacy and completeness of such documents submitted by the shareholders and review of the same to the satisfaction of the Company.

Documents received after 5th July, 2022 and / or incomplete documents will not be considered.

(2) The Tax Exemption Forms or the Forms & Documents for availing the benefit of Tax Treaty Rate submitted to the Company earlier for the Interim Dividend 2021-22 paid on 4th March, 2022 will not be considered relevant for this Final Dividend; Fresh Forms and Documents will be required to be submitted for availing such benefits.

(3) In the event the benefit of lower tax on dividend cannot be provided by the Company in the absence of or due to late receipt of the aforesaid documents, shareholders will still have an option to claim appropriate refund, if eligible, at the time of filing their income tax returns. No claim shall lie against the Company for taxes once deducted.

(4) In the event the dividend income as on the Record Date, i.e. 28th May, 2022, is assessable to tax in the hands of a person other than the registered shareholder (viz., the shares are held by a clearing member, broker etc. on behalf of the actual beneficial owner), such registered shareholder (i.e. the said clearing member, broker etc.) is required to furnish to the Company on or before 5th July, 2022, a declaration containing the name, address, residential status and PAN of the actual beneficial owner to whom TDS credit is to be given, and reasons for giving credit to such person. No request in this regard will be considered by the Company after 5th July, 2022.

(5) The TDS Certificate, if applicable, will be e-mailed to your registered e-mail address in due course of time, post payment of the aforesaid dividend.

Should you have any query or require any assistance in the matter, please write to Mr. T. K. Ghosal, Head of ISC, at e-mail ID isc@itc.in or you may call ISC at telephone nos. 1800-345-8152 (toll free) or 033-2288 6426 / 0034.