GODFREY PHILLIPS INDIA LIMITED
Registered office: ‘Macropolo Building’, Ground Floor, Dr. Babasaheb Ambedkar Road, Lalbaug, Mumbai – 400 033
Website: https://www.godfreyphillips.com/; Email: email@example.com; Ph: 022-6195 2300
Communication to Shareholders on Tax Deduction at Source on Dividend
Name of Shareholder: Test Name
Folio No. / DP Id & Client Id: 1234123467899876
Subject: Deduction of tax at source on dividend
We hope that you and your family are safe and healthy in this pandemic.
We wish to inform you that the Board of Directors of your Company (“Board”), at its meeting held on June 25, 2021, has recommended a dividend of Rs. 24 per equity share of the Company of face value of Rs. 2/- each, for the financial year ended March 31, 2021, subject to the approval of the shareholders of the Company at its ensuing Annual General Meeting.
The dividend, as recommended by the Board and if approved at the ensuing Annual General Meeting to be held on August 05, 2021, will be paid to shareholders holding equity shares of the Company, either in electronic or in physical form as on the record date, i.e. July 29, 2021.
In terms of the provisions of the Income-tax Act, 1961, (“the Act”), dividend paid or distributed by a Company on or after April 1, 2020 is taxable in the hands of the shareholders. The Company shall therefore be required to deduct tax at source at the time of payment of dividend. The deduction of tax at source will be based on the category of shareholders and subject to fulfilment of conditions as provided herein below:
- For resident shareholders
Tax will be deducted at source (“TDS”) under Section 194 of the Act @ 10% on the amount of dividend payable unless exempt under any of the provisions of the Act. However, in case of resident individual shareholders, TDS would not apply if the aggregate of total dividend distributed/ paid to them by the Company during a financial year 2021-22 does not exceed Rs.5,000/-.
Tax will not be deducted at source in cases where a shareholder provides Form 15G (applicable to resident individual below the age of 60 years) / Form 15H (applicable to a resident individual of age 60 years and above ), provided that the eligibility conditions are met. Blank Form 15G and 15H can be downloaded from the link given at the end of this communication. Please note that all fields mentioned in the Form are mandatory and the Company may reject the forms submitted, if it does not fulfil the requirement of the law.
Needless to mention, valid Permanent Account Number (“PAN”) will be mandatorily required.
NIL / lower tax shall be deducted on the dividend payable to following resident shareholders on submission of self-declaration (as per formats attached) as listed below:
- Insurance companies: Declaration that the provisions of Section 194 of the Act are not applicable to them along with self-attested copy of registration certificate and PAN card.
- Mutual Funds: Declaration by Mutual Fund shareholder eligible for exemption u/s 10(23D) of the Income- tax Act, 1961 along with self-attested copy of registration documents and PAN card.
- Alternative Investment Fund (AIF) established in India: Declaration that the shareholder is eligible for exemption under section 10(23FBA) of the Act and they are established as Category I or Category II AIF under the SEBI regulations, along with copy of self-attested registration documents and PAN card.
- New Pension System Trust: Declaration along with self-attested copy of documentary evidence supporting the exemption and self-attested copy of PAN card.
- Other shareholders – Declaration along with self-attested copy of documentary evidence supporting the exemption and self-attested copy of PAN card.
- Shareholders who have provided a valid certificate issued u/s. 197 of the Act for lower / nil rate of deduction or an exemption certificate issued by the income tax authorities along with Declaration.
The format of self-declaration can be downloaded from the link given at the end of this communication.
- For non-resident shareholders (including Foreign Portfolio Investors)
Tax is required to be withheld in accordance with the provisions of Section 195 and section 196D of the Act at applicable rates in force. As per the relevant provisions of the Act, the tax shall be withheld @ 20% (plus applicable surcharge and cess) on the amount of dividend payable. However, as per Section 90 of the Act, a non-resident shareholder has 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 shareholder, if they are more beneficial to the shareholder. For this purpose, i.e. to avail the Double Tax Avoidance Agreement (DTAA) benefits, the non-resident shareholder will have to provide the following:
- Self-attested copy of PAN card, if any, allotted by the Indian Income Tax Authorities;
- Self-attested copy of Tax Residency Certificate (“TRC”) obtained from the tax authorities of the country of which the shareholder is resident;
- Self-declaration in Form 10F (refer format)
- Self-declaration (refer format) by the non-resident shareholder of meeting DTAA eligibility requirement and satisfying beneficial ownership requirement (Non-resident having PE in India would need to comply with provisions of section 206AB of the IT Act).
- In case of Foreign Portfolio Investors, self-attested copy of SEBI registration certificate.
- In case of shareholder being tax resident of Singapore, please furnish the letter issued by the competent authority or any other evidences demonstrating the non-applicability of Article 24 – Limitation of Relief under India-Singapore Double Taxation Avoidance Agreement (DTAA).
The self-declarations referred to in point nos. (iii) to (iv) can be downloaded from the link given at the end of this communication
Application of beneficial DTAA rate shall depend upon the completeness and satisfactory review by the Company, of the documents submitted by non-resident shareholders and meeting requirement of the Act read with applicable DTAA. In absence of the same, the Company will not be obligated to apply the beneficial DTAA rate at the time of tax deduction on dividend.
- Section 206AB of the Act
Rate of TDS @10% u/s 194 of the Act is subject to provisions of section 206AB of Act (effective from July 1, 2021) which introduces special provisions for TDS in respect of non-filers of income-tax return. As provided in section 206AB, tax is required to be deducted at the highest of following rates in case of payments to specified persons:
– at twice the rate specified in the relevant provision of the Act; or
– at twice the rate or rates in force; or
– at the rate of 5%.
Where sections 206AA and 206AB are applicable simultaneously i.e. the specified person has not submitted the PAN as well as not filed returns; the tax shall be deducted at the higher of the two rates prescribed in these two sections.
The term ‘specified person’ is defined in sub section (3) of section 206AB of the Act who satisfies the following conditions:
- A person who has not filed the income tax return for two previous years immediately prior to the previous year in which tax is required to be deducted, for which the time limit of filing of return of income under section 139(1) of the Act has expired; and
- The aggregate of TDS and TCS in his case is Rs. 50,000 or more in each of these two previous years.
The non-resident who does not have the permanent establishment is excluded from the scope of a specified person.
For the purpose of TDS, Company will verify the status (i.e. Specified Person or not) from the Government enabled online facility and deduct TDS accordingly.
To summarise, dividend will be paid after deducting the tax at source as under:
- NIL for resident shareholders receiving dividend upto Rs. 5,000/- or in case Form 15G / Form 15H (as applicable) along with self-attested copy of the PAN card is submitted.
- 10% for other resident shareholders in case copy of PAN card is provided/available.
- 20% for resident shareholders if copy of PAN card is not provided / not available / or are specified person as per Section 206AB.
- Tax will be assessed on the basis of documents submitted by the non-resident shareholders.
- 20% plus applicable surcharge and cess for non-resident shareholders in case the relevant documents are not submitted.
- Lower/ NIL TDS on submission of self-attested copy of the valid certificate issued under section 197 of the Act.
Aforesaid rates will be subject to applicability of section 206AB of the Act.
In terms of Rule 37BA of Income Tax Rules 1962, if dividend income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, then such deductee should file declaration with Company in the manner prescribed by the Rules. The format of the Declaration can be downloaded from the link given at the end of this communication.
In the event of any income tax demand (including interest, penalty, etc.) arising from any misrepresentation, inaccuracy or omission of information provided / to be provided by the Shareholder(s), such Shareholder(s) will be responsible to indemnify the Company and also, provide the Company with all information / documents and co-operation in any appellate proceedings.
In case tax on dividend is deducted at a higher rate in the absence of receipt or defect in any of the aforementioned details / documents, you will be able to claim refund of the excess tax deducted by filing your income tax return. No claim shall lie against the Company for such taxes deducted.
Shareholders, whose valid PAN is updated, will be able to see the credit of TDS in Form 26AS, which can be downloaded from their e-filing account at https://www.incometax.gov.in/iec/foportal/
- Updation of PAN, email address and other details
Shareholders holding shares in dematerialized mode, are requested to update their records such as tax residential status, permanent account number (PAN), registered email addresses, mobile numbers and other details with their relevant depositories through their depository participants. Shareholders holding shares in physical mode are requested to furnish details to the Company’s registrar and share transfer agent LinkInTime India Private Limited. The Company is obligated to deduct tax at source (TDS) based on the records available with RTA and no request will be entertained for revision of TDS return.
The shareholders are requested to submit the aforementioned documents on or before July 29, 2021 to the Company’s Registrar and Share Transfer Agent, M/s. Link Intime India Private Limited at https://linkintime.co.in/formsreg/submission-of-form-15g-15h.html or email them at firstname.lastname@example.org
Documents received by Post, Courier or from registered email ID will only be accepted. In case of joint shareholders, the shareholder named first in the Register of Members is required to furnish the requisite documents for claiming any applicable beneficial tax rate.
- Update of Bank account details
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 you, along with a cancelled cheque leaf with your name and bank account details and a copy of your PAN card duly self-attested. 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.
We seek your co-operation in the matter.
Company Secretary and Compliance Officer
Godfrey Phillips India Limited
Click here to download – declaration under Rule 37BA of the Income Tax Act, 1961
Click here to download – declaration regarding Category and Beneficial Ownership of shares
Disclaimer: This communication shall not be treated as an advice from the Company. Shareholders should obtain the tax advice related to their tax matters from a tax professional
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