Tax on Interim Dividend 2021-22
The Finance Act 2020 has replaced the Dividend Distribution Tax (DDT) with the classical system of dividend taxation, hence dividend income is now 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 (for Resident shareholder at 10% with valid Permanent Account Number (PAN) or at 20% without/invalid PAN and for Non-Resident shareholders at the rates prescribed under the Act or Tax Treaty, read with Multilateral Instruments, if applicable). Further the Finance Act 2021 has brought in section 206AB effective from July 01, 2021 wherein tax would be deducted at higher rates (twice the specified rate) on payment of dividends to specified person.
According to the provisions of section 206AB, a specified person means a person who has not filed their returns of income for two years immediately preceding the year in which tax is required to be deducted and the aggregate of tax deducted at source and collected at source is rupees fifty thousand or more in each of these two years. Accordingly, applicable tax deduction rates for specified person would be twice the prescribed rates. For Resident specified shareholder it would be 20% and for Non-Resident specified shareholders (who has not furnished a declaration stating no permanent establishment in India) the tax deduction rates would be 40% plus applicable surcharge and cess as prescribed under the Act.
Further, no withholding of tax is applicable if the dividend payable to resident individual shareholders is up to Rs. 5,000 p.a. within a financial year.
The Board of Directors of Infosys Limited (the Company) in their meeting held on October 13, 2021 have declared an interim dividend of Rs. 15/- per equity share.
As it is important for the Company to receive the relevant information and declarations 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
Company has released the notification in the newspaper providing information about the record date for dividend, same is available here. If you are a shareholder of the Company as on the record date, and the dividend receivable by you is taxable under the Income Tax Act, 1961, the company shall be obligated to deduct taxes at source on the dividend payable to you as per the applicable provisions under the Income Tax Act, 1961.
Shareholders holding shares in dematerialized mode, are requested to update their records such as tax residential status, permanent account number (PAN), registered email addresses, mobile numbers and other details with their relevant depositories through their depository participants and shareholders holding shares in physical mode are requested to furnish details to the Company’s registrar and share transfer agent KFin Technologies Private Limited (formerly Karvy Fintech Private Limited).
The company has enabled a shareholder portal for shareholders to upload the relevant tax documents for purposes of tax deduction at source. We request shareholders to upload the relevant documents till October 28, 2021. No documents will be considered after October 28, 2021. We request shareholders to kindly take note of it accordingly.
The shareholders are requested to go through the list of documents to be provided by each types of shareholders provided at shareholder portal https://www.infosys.com/investors/shareholder-services/dividend-tax.html
All the documents submitted by you on or before October 28, 2021 will be verified by us and we will consider the same while deducting the appropriate taxes if they are in accordance with the provisions of the Income Tax Act, 1961.
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.
Shareholder can reach us for clarification at email@example.com or on WhatsApp + 91 6366953150. Details of QR code and instructions to access WhatsApp.
For information on taxes on previous dividends, please click on the below links: