I am a resident individual shareholder. Will my dividend be subject to TDS.
Effective April 1, 2020, the dividend income is taxable in the hands of shareholders. Accordingly, if any resident individual shareholder is in receipt of Dividend exceeding Rs. 5,000 in a fiscal year, entire dividend will be subject to TDS @ 10% provided you have updated your Permanent Account Number (PAN) with the depository, otherwise the TDS rate will be 20%. In case the dividend is not exceeding Rs 5,000 in a fiscal year to resident individual shareholder then no tax will be deducted from the dividend.
I am resident shareholder but not an individual. Will the dividend be subject to TDS.
Yes, the entire dividend will be subject to TDS for non-individual resident shareholders without any threshold limit. The tax deduction rate will be 10% provided the PAN is updated with the company or the depository and you are not falling under ‘specified person’ category as defined u/s 206AB of the Act as stated above, otherwise the TDS rate will be 20%.
Is the above rate of 10% or 20% as the case may be increased by surcharge and cess.
In case of resident shareholders, the rate of TDS would not be increased by surcharge and cess.
I am a resident individual and my dividend receipt is subject to TDS but tax on my estimated total income of the previous year after including this dividend income on which tax is to be deducted will be Nil. Can I request the company not to deduct tax at source and to pay the amount without deduction of tax at source.
Yes, you can approach the Company for non-deduction of tax at source. In case you are not a tax-payer/not liable for deduction of tax at source, please furnish a declaration in Form 15G for dividend, Form 15H for claiming tax exemption from interest paid on debentures/fixed deposits.
Note: Kindly send the forms duly completed by the 1st of April every year to avoid missing out on the book closure/record dates due to oversight. Forms 15H/15G are valid for only one financial year and fresh declaration has to be submitted every year.
From where can I download the Form 15G/15H and submit the same for non-deduction of tax.
The forms can be downloaded from the Forms section above.
What is the last date by which the form 15G/15H is to be submitted for non-deduction of tax on dividend.
Please submit the duly complete and signed forms at least 2 days before the Record date fixed for payment of dividend in order to verify and record the exemption from deduction of tax on source on dividend.
If the exemption forms are not submitted within the aforesaid time (Refer Investor Calendar/Dividend Payment Details), the same will be recorded for the subsequent dividends that may be declared by the Company during the year.
Where does the shareholder need to update the PAN.
In case the shares are held in Demat form then the PAN needs to be updated with your Depository Participant, and in case shares held in Physical form then the PAN need to be updated with Link Intime India Pvt. Ltd.
How do I obtain a duplicate Tax Deduction certificate.
Shareholder can download the tax deduction certificate form (26 AS) from the income tax site at www.incometax.gov.in.
How can a shareholder know the quantum of tax deducted from his dividend income by the company.
Shareholders can use the “View Your Tax Credit” (Form 26AS) facility available at www.incometax.gov.in. Please note the credit in form 26AS shall be reflected after TDS statement filed by company on a quarterly basis is processed by tax authority. Below are the navigation steps to be followed:
- Go to the 'My Account' menu, click 'View Form 26AS (Tax Credit)' link.
- Read the disclaimer, click 'Confirm' and the user will be redirected to TDS-CPC Portal.
- In the TDS-CPC Portal, Agree the acceptance of usage, and click on ‘Proceed’.
- Click 'View Tax Credit (Form 26AS)'.
What is the rate of withholding tax on dividend declared and paid to non-resident shareholders. Is there any limit upto which no tax will be withheld?
For non-resident shareholders, the rate of withholding tax is 20% (plus applicable surcharge and cess) as per the Income Tax Act. In case of dividend to a non-resident shareholder having permanent establishment in India, falling under ‘specified person’ category u/s 206AB of the Act, will be subject to withholding at twice the applicable rate. However, where non-resident shareholder is eligible to claim the tax treaty benefit and the tax rate provided in respective tax treaty is beneficial than rate as per tax treaty would be applied. In order to avail tax treaty benefits, non-resident shareholders would be required to submit certain documents. Please note that there is no threshold provided for which no tax will be withheld. Entire dividend is subject to withholding of tax.
Is the above rate of 20% increased by surcharge and cess.
Yes, in case of non-resident shareholders the rate of 20% would be increased by applicable Surcharge and Cess based on the status of the non-resident.
What is the applicable rate of surcharge for non-resident shareholders (including FIIs/FPIs).
The rate of surcharge depends upon the status of the non-resident and its income.
For Non-resident Individuals the rate of surcharge is as under:
| Income Slab |
Rate of Surcharge |
| More than INR 50 Lacs but not exceeding INR 1 Crore |
10% |
| Above INR 1 Crore |
15% |
For Non-resident other than Individuals the rate of surcharge is as under:
| Income Slab |
Rate of Surcharge |
| More than INR 1 Crore but not exceeding INR 10 Crores |
2% |
| Above INR 10 Crores |
5% |
Who are eligible for a relief of concessional rate of withholding tax as per the Tax Treaty entered by India with other countries? If eligible, what are the documents required for availing such relief.
Non-resident shareholders (including FIIs/FPIs) who are tax residents of countries which have signed Double Taxation Avoidance Agreement with India are eligible for a relief of concessional rate of TDS as per the Tax Treaty (if any).
Following documents are required for availing the concessional rate of withholding tax:
- Tax Residency Certificate for the year in which dividend is received (to be issued by Revenue/Tax authorities of home country)
- Form 10F as per the format specified under Income Tax Act, 1961
- Self-Declaration for the year in which dividend is received. Principally, following should be covered in the self-declaration
- Non-resident is eligible to claim the benefit of respective tax treaty
- Non-resident receiving the dividend income is beneficial owner of such income
- Dividend income is not attributable/effectively connected to any Permanent Establishment (PE) or Fixed Base in India
Specimen of Form 10F and self-declaration are available under the Forms section.
When are the documents required for claiming concessional rate benefit under the Treaty are required to be submitted.
A non-resident willing to claim concessional rate benefit under the Treaty should submit the documents at the starting of every year or at least 2 days before the Record date fixed for payment of dividend (Refer Dividend Payment Details) in order to verify and record the exemption from deduction of tax on source on dividend.
If the required documents are not submitted by the aforesaid time the same will be recorded for the subsequent dividends that may be declared by the Company during the year.