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NEW PROVISIONS OF INCOME TAX ON DIVIDEND IN INDIA


INCOME TAX ON DIVIDEND IN INDIA


Pursuant to the changes introduced by the Finance Act 2020, w.e.f. April 1, 2020, the Company would be required to withhold taxes at prescribed rates on the dividend paid to its shareholders. The withholding tax rate would vary depending on the residential status of the shareholder and the documents submitted by them and accepted by the Company.

Resident Shareholder


Particulars
Applicable Rate
Documents Required (if any)
With PAN
7.5% *
Update the PAN, if not already done.
Without PAN/ Invalid PAN
20%

Submitting Form 15G/ Form 15H
NIL
Declaration in Form No.15G (applicable to any person other than a company or a firm)/Form 15H (applicable to an Individual who is 60 years and older), fulfilling certain conditions.
Submitting Order under section 197 of the Income Tax Act, 1961 (Act)
Rate provided in the Order
Lower/NIL withholding tax certificate obtained from tax authority.
Shareholders (e.g. LIC, GIC) for whom Section 194 of the Act is not applicable
NIL
Documentary evidence that the said provisions are not applicable.

  Persons Covered under Section 196 of the Act (e.g. Mutual Funds, Govt)

NIL
Documentary evidence that the person is covered under said Section 196 of the Act.

Non-Resident Shareholder:

Foreign Institutional Investors (FIIs)/ Foreign Portfolio Investors (FPIs)



20% (plus applicable surcharge and cess)





None
* Notwithstanding the above, tax would not be deducted on payment of dividend to resident Individual Shareholder, if total dividend to be paid in FY 2020-21 does not exceed 5,000.

CA MOHAMED ASHARAF, FCA, DISA(ICA)
+919447746535
www.numerzone.com


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