Tax on Final Dividend 2019-20
The Finance Act 2020 has replaced the Dividend Distribution Tax (DDT) with the classical system of dividend taxation wherein dividend income will be taxed in the hands of the shareholders. In the light of the above changes, under the Income-tax Act, 1961 (Act), companies paying dividend are required to withhold tax at the applicable tax rates (7.5% for resident shareholders with valid Permanent Account Number (PAN), 20% for resident shareholders without PAN or invalid PAN and rates prescribed under the Act or Tax Treaty, read with Multilateral Instruments, if applicable, for non-resident shareholders). No withholding of tax is applicable if the dividend payable to resident individual shareholders having valid PAN is less than Rs. 5,000 p.a.
As it is important for the Company to receive the relevant information from shareholders to determine the rate of tax deduction, the Company has sent out communications to shareholders as per the classification given below (please click below hyperlink for details):
- Resident individual shareholders with valid PAN
- Resident individual shareholders without PAN or invalid PAN
- Resident mutual funds and insurance company shareholders
- Resident non-individual shareholders (Company, Firms, Trust, HUF, AOP, Bank, etc.)
- Non-resident shareholders (Foreign Institutional Investor)
- Non-resident shareholders (Others)
Further, the Company has released the notification in the newspaper providing information about the record date for dividend and the brief on taxation on the dividend. The same is available here: Link for the paper notification.
The company is enabling a shareholder portal from June 1, 2020 for shareholders to upload the relevant tax documents for purposes of tax deduction at source. We request shareholders to upload the relevant documents between June 1, 2020 to June 15, 2020. No documents will be considered after June 15, 2020. We request shareholders to kindly take note of it accordingly.
The shareholder portal is available here: Link for the shareholder portal.
Instructions and guidelines for the shareholder portal are available here. Link for instructions and guidelines.