The Dividend declared by the Company to its shareholders which remains unclaimed gets accumulated with the Company. The Ministry of Corporate Affairs (MCA) addressed the issue by introducing Section 125 of the Companies Act, 2013, thereby making it compulsory to deposit unclaimed dividend lying with the Companies for a period of seven years to the Investor Education and Protection Fund (IEPF), administered by the Central Government.
In terms of “Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016”, companies have to identify and upload details of unclaimed dividend on their website.
Accordingly, information is provided for the benefit of our shareholders.
TDS on Dividend
Members may note that by virtue of the amendment to Income Tax Act, 1961 (IT Act) vide Finance Act, 2020, dividends paid or distributed by the Company after April 01, 2020 shall be taxable in the hands of the shareholder. Therefore, the Company would be required to deduct taxes at the prescribed rates on the dividend paid to its shareholders w.e.f. 1st April 2020. The withholding tax rate would vary depending on the residential status of the shareholder and documents registered with the Company.
In order to enable the Company to determine the appropriate TDS rate as applicable, members are requested to submit the following documents in accordance with the provisions of the IT Act as detailed below:
1. Where Permanent Account Number (PAN) is available and has been furnished to the Company, tax shall be deducted at source @ 10% on the amount of Dividend in accordance with the provisions of Section 194 of the Income Tax Act, 1961.
2. Where PAN is not available/invalid/not submitted, tax shall be deducted at source @ 20% on the amount of Dividend as per Section 206AA of the Income Tax Act, 1961.
3. However, no TDS shall be deducted on the Dividend payable to a resident Individual shareholder if:
No tax will be withheld from Dividend to be paid to Mutual Funds and Category – I & II Alternate Investment Funds registered with SEBI. The Mutual Funds and Alternate Investment Funds shall, however, furnish the following documents to the Company’s RTA, KFin Technologies Private Limited.
B. NON-RESIDENT SHAREHOLDERS:
For non-resident shareholders, taxes are required to be withheld in accordance with the provisions of Section 195 and other applicable sections of the IT 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 IT Act, non-resident shareholders have 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 member, if such DTAA provisions are more beneficial to the shareholder. For this purpose, i.e. to avail the benefits under the DTAA, non-resident shareholders will have to provide the following:
– Self-attested copy of the PAN card allotted by the Indian Income Tax authorities.
– Self-attested copy of Tax Residency Certificate (TRC) for the FY 2021-22 obtained from the revenue authorities of the country of tax residence.
– Self-declaration in Form 10F (Click here to download Form 10F ).
– Self-declaration for the financial year 2021-22 (Click here to download the self-declaration format), certifying the following:
– Any other documents as prescribed under the IT Act for lower withholding of taxes if applicable, duly attested by member.
Please note that the application of beneficial DTAA rate at the time of tax deduction / withholding on Dividend shall depend upon the completeness and satisfactory review by the Company of the documents submitted by shareholder. In case of Foreign Institutional Investors / Foreign Portfolio Investors, tax will be deducted under Section 196D of the IT Act @ 20% (plus applicable surcharge and cess).
C. SUBMISSION OF DOCUMENTS:
Click here to submit the exemption forms online.
The aforementioned documents can be sent to email@example.com or firstname.lastname@example.org. Members can also send the abovementioned documents to M/s. KFin Technologies Private Limited at Selenium Building, Tower-B, Plot No 31 & 32, Financial District, Nanakramguda, Serilingampally, Hyderabad – 500 032, Telengana.