TDS on Dividend

Dear Shareholder,

Subject: Communication in respect of deduction of Tax At Source (TDS) on Dividend Payment for the year 2019-2020.

We hope that you and your family are doing well and are safe and healthy. Please take care of yourselves and your family.

We wish to inform you that the Board of Directors of your Company have at their meeting held on 12th June 2020 recommended dividend of Re.1/- per equity share having nominal value of Re.1/- each for the financial year ended 31st March, 2020.

The dividend, as recommended by the Board, if approved at the ensuing annual general meeting, will be paid to shareholders holding equity shares of the Company, either in electronic or in physical form after the book closure dates (to be announced in due course), for determining eligibility of shareholders to receive dividend. However, it may be noted that due to the current situation, it would be advisable to get dividend in electronic mode, hence all shareholders who have not either given their bank account details to Depository Participants (DP) or to the Company should update their bank account details with their DP in case shares are held in demat form and to the company if shares are held in physical form.

In accordance with the provisions of the Income Tax Act, 1961 (‘the Act’) as amended by and read with the provisions of the Finance Act, 2020, with effect from April 1, 2020, dividend declared and paid by the Company is taxable in the hands of shareholders and the Company is required to deduct tax at source (‘TDS’) from dividend paid to the shareholders at the applicable rates.

Tax rates that are applicable to shareholders depend upon their residential status and classification as per the provisions of the Act. All shareholders are thereby requested to update the residential status and category in their respective Demat accounts if the shareholding is in demat form and if shareholding is held in physical form then with the Company, as may be applicable.

This communication summarizes the applicable TDS provisions, for Resident and Non-Resident shareholder categories as per the Act.

For Resident Shareholders:-

  • Where, the Permanent Account Number (‘PAN’) is available and such PAN is valid / operative as per the provisions of the Act :-
    • Tax shall be deducted at source in accordance with the provisions of section 194 of the Act @ 7.50% on the amount of dividend payable unless exempt under the provisions of the Act and subject to furnishing of following self-certified documents.
      • Insurance companies: Documentary evidence that the provisions of section 194 of the Act are not applicable to them;
      • Mutual Funds: Documentary evidence to prove that the mutual fund is a mutual fund specified under clause (23D) of section 10 of the Act;
      • Alternative Investment Fund (AIF) established in India
        • Documentary evidence to prove that Investment Fund is a fund as defined in clause (a) of the Explanation 1 of section 115UB of the Act; and
        • declaration that its dividend income is exempt under section 10(23FBA) of the Act.
      • Form 15G/15H in the case of eligible resident shareholders: No tax shall be deducted in the case of a resident shareholder if the shareholder provides duly signed Form 15G (applicable to any person other than a Company or a Firm) or Form 15H (applicable to an individual above the age of 60 years), provided that all the prescribed eligibility conditions are met. Click here to download the blank Form 15G and Form 15H
    • No tax shall be deducted in the case of a resident individual shareholder, if the amount of dividend paid or likely to be paid during the FY 2020-21 does not exceed INR 5,000.
    • Where a shareholder furnishes lower / nil withholding tax certificate u/s. 197 of the Act, TDS will be deducted as per the rates prescribed in such certificate.
  • Notwithstanding the above, where tax is deductible under the provisions of the Act and the PAN of the shareholder is either not available or PAN available in records of the Company is invalid / inoperative, tax shall be deducted @ 20% as per section 206AA of the Act.

For Non-Resident Shareholders:-

  • 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 provisions of the Act, the tax shall be withheld @ 20% (plus applicable surcharge and cess) on the amount of dividend payable.
  • As per section 90 of the Act, the non-resident shareholder has an option to apply provisions of the Double Taxation Avoidance Agreement (‘DTAA’) between India and the country of tax residence of the shareholder, if such DTAA provisions are more beneficial to such shareholder. To avail the benefits of DTAA, the non-resident shareholder will have to provide the following documents:-
    • Self-attested copy of Permanent Account Number (‘PAN’) allotted by the Indian tax authorities;
    • Self-attested copy of Tax Residency Certificate (‘TRC’) issued by the tax authorities of the country of which shareholder is tax resident, evidencing and certifying shareholder’s tax residency status during FY 2020-21;
    • Completed and duly signed Self-Declaration in Form 10F; (Click here to download)
    • Self-declaration (Click here to download) in the prescribed format primarily certifying on the following points:-
      • Shareholder is and will continue to remain a tax resident of the country of its residence during FY 2020-21;
      • Shareholder is the beneficial owner of the shares and entitle to receive the dividend from the Company;
      • Shareholder qualifies as ‘person’ as per DTAA and is eligible to claim the beneficial DTAA rate for the purposes of tax withholding on dividend declared by the Company;
      • Shareholder has no permanent establishment / business connection / place of effective management in India;
      • Shareholder has no reason to believe that its claim for the benefits of the DTAA is impaired in any manner;

      The Company is not obligated to apply the beneficial DTAA rates at the time of tax deduction on dividend paid to shareholders. Application of beneficial DTAA Rate shall depend upon the completeness and satisfactory review by the Company, of the documents submitted by Non- Resident shareholder.

  • Where the PAN is either not available or is invalid, DTAA benefit shall not be granted and tax shall be deducted at the prescribed rate or 20%, whichever is higher.
  • Notwithstanding the above, in case of Foreign Institutional Investors (FII) and Foreign Portfolio Investors (FPI), taxes shall be withheld at 20% plus applicable surcharge and cess in accordance with provisions of Section 196D of the Income Tax Act.
  • Where a shareholder furnishes lower / nil withholding tax certificate u/s. 197 of the Act, TDS will be deducted as per the rates prescribed in such certificate.

For all Shareholders:-

To enable us to determine the appropriate TDS / withholding tax rate applicable, we request you to provide the above details and documents not later than 4th September, 2020.

The aforementioned documents should be emailed to hiltds@adityabirla.com. Kindly note that where the requisite documents furnished by the shareholders are incomplete or not properly executed, DTAA benefit / lower rate benefit shall not be granted and tax shall be deducted @ 20% (plus surcharge and cess, wherever applicable). In case the requisite documents are submitted by the shareholders through his/her registered email, the Company has full right to demand for the original documents and the shareholders undertake to abide by such request. Documents received by Registered Post or from registered email ID will only be accepted.

In case of joint shareholders, the shareholder named first in the Register of Members shall furnish the requisite documents for claiming any beneficial tax rate applicability.

No communication on the tax determination/ deduction shall be considered after 4th September 2020.

The Company will arrange to email a soft copy of TDS certificate to you at your registered email ID in due course after payment of the dividend.

Shareholders may note that in case the tax on said dividend is deducted at a higher rate in absence of receipt of the aforementioned details/documents from you by stipulated date, option is available to you to file the return of income as per Act and claim an appropriate refund, if eligible. No claim shall lie against the Company for such taxes deducted.

While on the subject, we request you to submit / update your bank account details with your Depository Participant, in case you are holding shares in the electronic form. In case your shareholding is in the physical form, you will have to submit a scanned copy of a covering letter, duly signed by the first shareholder, along with a cancelled cheque leaf with your name and bank account details and a copy of your PAN card, duly self-attested, with the Company. This will facilitate receipt of dividend directly into your bank account. In case the cancelled cheque leaf does not bear your name, please attach a copy of the bank pass-book statement, duly self-attested.

Note: Please always quote your registered Folio Number/DP ID & Client ID, PAN as under, while communicating/submitting documents as mentioned above with the Company. Please ensure to send all communication in this regard to email id: hiltds@adityabirla.com.

DPID/CLIENT FOLIO NO PAN number Form No.
     

We request your cooperation in this regard.

For  Hindalco Industries Limited,
Sd/-
Anil Malik
President & Company Secretary

In this section