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TDS on Dividend

FAQs – TDS on Dividend to be distributed in FY 2024-25

FAQs – TDS on Dividend to be distributed in FY 2024-25

TDS exemption forms

FAQs – TDS on Dividend to be distributed in FY 2023-24

FAQs – TDS on Dividend to be distributed in FY 2023-24

TDS exemption forms

Letter of Intimation – TDS on Interim Dividend payment

FAQs – TDS on Dividend to be distributed in FY 2021-22

FAQs – TDS on Dividend to be distributed in FY 2021-22

TDS exemption forms

TDS on Dividend to be distributed in Financial Year 2020-21

As you are aware that the Board of Directors of your Company at their meeting held on June 4, 2020 had recommended a Final Dividend of Rs. 2/- per share for the financial year ended March 31, 2020. This said Final Dividend is subject to approval of shareholders at the forthcoming 37th Annual General Meeting which is scheduled to be held on 22nd September 2020. The Dividend will be paid to those members whose names will appear in the Register of Members or in the records of the Depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as beneficial owners of the equity shares as at the end of business hours on Wednesday, September 2, 2020. The Register of Members and Transfer Books of the Company will be closed from Thursday, September 3, 2020 to Saturday, September 5, 2020 (both days inclusive).

FAQs on Tax deducted at Source (TDS) on Dividend

Finance Act 2020 has introduced the new tax regime for taxing the dividend income in the hands of shareholders. Prior to April 01, 2020, dividend distribution was subject to Dividend distribution tax (DDT) in the hands of the company and such dividend income was exempted in the hands of shareholders.

However w.e.f. April 01, 2020, DDT has been abolished and Dividend income is now taxable in the hands of the shareholders, which needs to be deducted by the company at the time of payment of dividend. Taxability of the dividend shall depend upon class of the shareholder(s), quantum of dividend and country of their residence.

The objective of this FAQ is to bring clarity on the possible concerns of the shareholders.

Note: This FAQ shall not be construed as a legal advice and the shareholders should consult their advisors for any further clarity

  Resident in India 

Q1. I am a resident shareholder. Will my dividend be subject to TDS?

Effective April 01, 2020, Dividend is taxable in the hands of shareholders and therefore TDS will also be deducted as per the provisions in the Income-Tax Act, 1961.

Q2. I am a resident shareholder (i.e. Individual, HUF, BOI, AOP, Partnership Firms, Corporations), at what rate TDS will be deducted?

TDS will be deducted @7.5%* of dividend paid during the FY 2020-21. However, where the dividend payout does not exceed Rs. 5,000 in case of resident individuals, no TDS shall be deducted. For all other categories of shareholders (including individuals deriving dividend in excess of Rs. 5,000), availability of Permanent Account Number (PAN) with the depository/ Transfer Agent is mandatory, else tax rate of 20% would be applied. Accordingly, shareholders are advised to immediately update their Permanent Account Number (PAN) with the depository/ Transfer Agent.

* The TDS rate prescribed in the Income-Tax act, 1961 is 10%. however, the TDS rates applicable on payments to residents were reduced by 25% i.e. to 7.5% owning to the Covid-19 pandemic by way of a CBDT press release dated May 13, 2020. please note, reduced TDS, as announced by Finance Minister, is applicable till March 31, 2021 to the resident shareholder.

Q3. Is the above rate of 7.5% or 20%, as the case be, increased by surcharge and cess?

For resident shareholders, the rate of TDS would not be increased by surcharge and cess. For non-resident shareholders, the rate of TDS would be increased by applicable surcharge and cess where relevant Tax Treaty benefit is not available.

Q4. Whether there is any threshold while deducting TDS payment on dividend distribution?

Yes, if the dividend distributed to a resident individual shareholder does not exceed Rs 5,000 in a financial year, then no tax will be deducted. However, no such threshold is applicable for payment to shareholders other than an individual.

Q5. I am a resident individual or a person (other than Company or Firm) and my dividend receipt is subject to TDS. However, tax on my
estimated total income for the FY 2020-2021 after including this dividend income on which tax is to be deducted, will be NIL.
Can I then request the Company not to deduct tax at source and to pay the amount without deduction of tax at source?

Yes, in case you are resident Individual/ HUF shareholder and your total income is not exceeding the income chargeable to tax in India as per Income Tax Act, 1961, then you can submit Form 15G/15H immediately to the Company along with copy of self-attested PAN card. Please note Form 15G/H if applicable is to be filed every Financial Year preferably in the month of April (beginning of the FY). Please ensure that your correct PAN card details are already updated in your demat account /physical folio as the case may be before applying so.

 

Q6. Where does the shareholder need to update the PAN?

Demat Shareholding:

If the shares are held in Demat form, the PAN needs to be updated with the Depository.

Physical Shareholding:

If the shares are held in physical form, the PAN needs to be updated with the Company’s Registrar and Transfer Agents – M/s Alankit Assignments Limited, Alankit House, 4E/2, Jhandewalan Extension, New Delhi -110 055

If the PAN is already updated, no further action is required

Please refer quest. No. 11 for sending documents.

Q7. Are there any Indian entities exempted from deduction of TDS on Dividend?

Yes, there are following entities which are exempt from TDS on dividend

  • Insurance entities (LIC, GIC, etc.): TDS is not applicable on payment of dividend to these insurance entities which are given exemption under proviso to section 194 of Income Tax Act, 1961. Such Insurance entities should provide a self-declaration that they are engaged in insurance business with a self-attested copy of PAN card and registration certificate with Insurance Regulatory and Development Authority (IRDA).
  • Mutual Funds:: In terms of section 196, TDS is not applicable on payment of dividend to Mutual Funds covered under section 10(23D) of Income Tax Act, 1961. Such Mutual Funds should provide a self-declaration that they are covered under Section 10 (23D) of the Income Tax Act, 1961, with a self-attested copy of PAN card and registration certificate.
  • Indian Government entities:In terms of section 196, TDS is not applicable on payment of dividend to Government entities (Central or State). Such Government entities should provide a documentary evidence for the same. It may be noted that Public Sector Undertakings (PSUs) donot characterize as Government.
  • Corporation established by or under a Central Act which is exempt from Income-Tax on its income:In terms of section 196, TDS is not applicable on payment of dividend to a corporation established by or under a Central Act which is exempt from Income-Tax on its income. Such corporations should provide a documentary evidence for the aforesaid.
  • Alternate investment fund (category – I & II):TDS is not applicable on payment of dividend to Alternate investment fund (category – I & II), covered by Notification No. 51/2015 dated June 25, 2015, where dividend is exempt under section 10(23FBA) and this entity is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012. Such entities should provide a self-attested copy certificate of registration as a Category I or a Category II Alternative Investment Fund with PAN.
  • Persons who have obtained a certificate under section 197 of the Income-Tax Act: TDS would be done as per the lower or nil rate that may be mentioned in the certificate under section 197 of the Act. The certificate furnished to the Company should specifically mention the nature of income as dividend, amount expected and the payer as NIIT Limited.
  • Other persons who may be exempt under any other provisions under the Income Tax Act:The Company, in absence of any express dispensation in the statute, would generally do a TDS on dividend payments to such persons so as to comply the provisions of the Income Tax Act and get into any litigation. However, in a case where a shareholder furnishes – a) relevant documentation to suggest that it is exempt from tax; and b) a specific notification/ circular issued by the CBDT stating that TDS should not be done on payments to such a shareholder, the Company, basis the advise from its tax team, would decide whether tax deduction is required.

 

Q8. Deduction of TDS by lower/NIL rate

If you have obtained lower/NIL deduction certificate under section 197 from Income Tax department kindly share copy of the same with us latest by September 10, 2020 to apply lower/NIL TDS rate as mentioned in such certificate.

Q9. What is the timeline to submit all of above mentioned Annexures or any other relevant document?

  • All of the documents duly signed/certified should be sent on/before September 10, 2020 to Company and/or its Registrar & Share Transfer Agent:
     – NIIT Limited
    Investor Services
    Registered Office: 8, Balaji Estate, First Floor,
    Guru Ravi Das Marg, Kalkaji, New Delhi – 110 019
    E-Mail: NIITDIVTDS@niit.com ;investors@niit.com

    – Alankit Assignments Limited (Registrar and Share Transfer Agent)
    Alankit House, 4E/2, Jhandewalan Extension, New Delhi -110 055
    Email: rta@alankit.com

  • Failure to do so, will attract higher TDS rates as mentioned in the above paragraphs. Request and copy of documents to be sent through your registered email to the abovementioned email of Company and /or RTA. Otherwise copies of document be sent to the Company’s abovementioned registered office address.
  • If the tax on dividend is deducted at a higher rate in absence of receipt of or satisfactory completeness of the afore-mentioned details/documents, then the shareholder may claim an appropriate refund in their return of income filed with their respective Tax authorities.

Q10. How can I get Information on tax deducted on my dividend income?

  • The Company will arrange to email a soft copy of the TDS certificate at the shareholders registered email ID in due course. Please ensure your correct email Id is updated in your demat account /physical folio. If not, please get it updated as soon as possible as prescribed above for PAN card updation
  • Shareholders will also be able to see the credit of TDS in Form 26AS, which can be downloaded from their Income Tax e-filing accounts by following below process:-
    • (i) Login your tax account with user id and Password to https://www.incometaxindiaefiling.gov.in
    • (ii) Go to My Account Tab and select option View Form 26AS (Tax Credit)
    • (iii) Confirm the page and agree with terms and conditions
    • (iv) Now click on View Tax Credit (Form 26AS)
    • (v) Select Assessment Year 2021-22 and select view as HTML and then press the button on view/download
    • (vi) You will get your Form 26AS where you can see your TDS credit on dividend.
  • Please note, TDS credit in Form 26AS would be reflected after the TDS Return is filed on a quarterly basis by the Company, and the same is processed by the Income-tax department.

Q11. For your queries:

In case of any other query (if any), Please write us at investors@niit.com ; NIITDIVTDS@niit.com

 

Non–Resident in India

 

Q1. What is the WHT rate applicable for shareholders being Foreign Institutional Investors (FIIs)/Foreign Portfolio Investors (FPIs)
not being corporates?

In view of specific provision under section 196D of the Income Tax Act 1961, WHT shall be deducted @ 20% (plus applicable Surcharge and Cess) on dividend paid to Foreign Institutional Investors (“FIIs”) /Foreign Portfolio Investors (“FPIs”). Rates of WHT/TDS including surcharge and cess are tabulated given below:

FII/ FPI making investment under FPI route) in form of trusts/AOP

S.No.Range of Dividend IncomeWHT/TDS RateSurchargeEducation CessRate of WHT/TDS including Surcharge and Cess

1Upto ₹ 50 Lacs20%NIL4%20.80%

2Above ₹ 50 Lacs but not exceeding ₹ 1 Crore20%10%4%22.88%

3Above ₹ 1 Crore but not exceeding ₹ 2 Crores20%15%4%23.92%

4Above ₹ 2 Crores but not exceeding ₹ 5 Crores20%25%4%26.00%

5Above ₹ 5 Crores20%37%4%28.496%

FII/ FPI (making investment under FPI route) in form of Company

S.No.Range of Dividend IncomeWHT/TDS RateSurchargeEducation CessRate of WHT/TDS including Surcharge and Cess

1Above ₹ 1 Crore but not exceeding ₹ 10 Crore20%2%4%21.216%

2Above ₹ 10 Crores20%5%4%21.84%

FII/ FPI (making investment under FPI route) in form of Firm

S.No.Range of Dividend IncomeWHT/TDS RateSurchargeEducation CessRate of WHT/TDS including Surcharge and Cess

1Above ₹ 1 Crore20%12%4%23.296%

Q2. What is WHT/ TDS rate applicable to non-resident shareholders other than FIIs/ FPIs?

a. Tax Residency Certificate (TRC) for FY 2020-21. TRC can be obtained from the Revenue / Tax authorities of the country of which the shareholder is resident.

b. Form 10F as per the format specified under Income Tax Act, 1961 available at https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007197.pdf

c. Copy of PAN Card, if available; In absence of PAN, the following information/ document is mandatory: in respect of the non-resident shareholder: i) Name, e-mail id, contact number; ii) Address in the country of residence; iii) Tax Residency Certificate (TRC), if the law of country of residence provides for such certificate; and iv) Tax Identification Number (TIN) in the country of residence. Where TIN is not available, a unique identification number is required to be furnished through which the deductee is identified in the country of residence.

d. Self-declaration inter-alia of beneficial ownership, not having a PE in India, etc.

  • For non-resident shareholders, the rate of withholding tax is 20% (plus applicable Surcharge and Cess).
  • However, where a non-resident shareholder is eligible to claim the tax treaty benefit, and the tax rate provided in the respective tax treaty is beneficial to the shareholder, then the rate as per the tax treaty would be applied.
  • In order to avail tax treaty benefits, non-resident shareholders would be required to submit the following documents:

  • Please note that the Company is not obligated to apply the beneficial treaty rates at the time of tax deduction of TDS on dividend. Application of beneficial treaty rate shall depend upon the completeness and satisfactory review by the Company, of the documents submitted by the non- resident shareholder.

  • If the documents are not provided or are not complete in order to provide the beneficial treaty rates, then tax will be deducted at 20% plus applicable surcharge and cess.

Rates of TDS (for non-resident individuals, HUF, AOP, BOI) including surcharge and cess are tabulated given below:

S.No.Range of Dividend IncomeTDS RateSurchargeEducation CessRate of TDS including Surcharge and Cess

1Upto ₹ 50 Lacs20%NIL4%20.80%

2Above ₹ 50 Lacs but not exceeding ₹ 1 Crore20%10%4%22.88%

3Above ₹ 1 Crore20%15%4%23.92%

Rates of TDS for non-resident companies including surcharge and cess are tabulated given below:

S.No.Range of Dividend IncomeTDS RateSurchargeEducation CessRate of TDS including Surcharge and Cess

1Upto ₹ 1 Crore20%NIL4%20.80%

2Above ₹ 1 Crore but not exceeding ₹ 10 Crores20%2%4%21.22%

3Above ₹ 10 Crores20%5%4%21.84%

Non-residents who have obtained a certificate under section 197 of the Income-Tax Act: TDS would be done as per the lower or NIL rate that may be mentioned in the certificate under section 197 of the Act. The certificate furnished to the Company should specifically mention the nature of income as dividend, amount expected and the payer as NIIT Limited.

Q3. Deduction of TDS by lower/NIL rate

If you have obtained lower/NIL deduction certificate under section 197 from Income Tax department kindly share copy of the same with us latest by September 10, 2020 to apply lower/NIL TDS rate as mentioned in such certificate.

Q4. What is the timeline to submit all of above mentioned Annexures or any other relevant document?

  • All of the documents duly signed/certified should be sent on/before September 10, 2020 to Company and/or its Registrar & Share Transfer Agent:
     – NIIT Limited
    Investor Services
    Registered Office: 8, Balaji Estate, First Floor,
    Guru Ravi Das Marg, Kalkaji, New Delhi – 110 019
    E-Mail: NIITDIVTDS@niit.com ;investors@niit.com

    – Alankit Assignments Limited (Registrar and Share Transfer Agent)
    Alankit House, 4E/2, Jhandewalan Extension, New Delhi -110 055
    Email: rta@alankit.com

  • • Failure to do so, will attract higher TDS rates as mentioned in the above paragraphs. Request and copy of documents to be sent through your registered email to the abovementioned email of Company and /or RTA. Otherwise copies of document be sent to the Company’s abovementioned registered office address.
  • If the tax on dividend is deducted at a higher rate in absence of receipt of or satisfactory completeness of the afore-mentioned details/documents, then the shareholder may claim an appropriate refund in their return of income filed with their respective Tax authorities.

Q5. How can I get Information on tax deducted on my dividend income?

  • The Company will arrange to email a soft copy of the TDS certificate at the shareholders registered email ID in due course. Please ensure your correct email Id is updated in your demat account /physical folio. If not, please get it updated as soon as possible as prescribed above for PAN card updation
  • Shareholders will also be able to see the credit of TDS in Form 26AS, which can be downloaded from their Income Tax e-filing accounts by following below process:-
    • (i) Login your tax account with user id and Password to https://www.incometaxindiaefiling.gov.in
    • (ii) Go to My Account Tab and select option View Form 26AS (Tax Credit)
    • (iii) Confirm the page and agree with terms and conditions
    • (iv) Now click on View Tax Credit (Form 26AS)
    • (v) Select Assessment Year 2021-22 and select view as HTML and then press the button on view/download
    • (vi) You will get your Form 26AS where you can see your TDS credit on dividend.
  • Please note, TDS credit in Form 26AS would be reflected after the TDS Return is filed on a quarterly basis by the Company, and the same is processed by the Income-tax department.

Q6. For your queries:

In case of any other query (if any), Please write us at investors@niit.com ; NIITDIVTDS@niit.com

Calculator for TDS on dividend payable in FY2020-21

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