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Deduction of Tax on Dividend Payments
Communication of deduction of Tax at Source on Dividend
In accordance with the provisions of the Income Tax Act, 1961 (‘ Act’) as amended by and read with the provisions of the Finance Act, 2020, applicable with effect from April 1, 2020, dividend declared and paid by the Company is taxable in the hands of its shareholders, and accordingly the Company is required to deduct tax at source (TDS) at the applicable rates.
However, no TDS shall be deducted on the Dividend payable to a resident Individual if the total dividend to be received by them during FY 2020-21 does not exceed Rs. 5,000.
In view of the above, starting from the current financial year i.e. April 1, 2020 onwards, the Company would be deducting TDS as per applicable provisions and TDS rates, while paying dividend. In case of resident shareholders, the rate currently prescribed for TDS is 7.5% for those resident shareholders with valid Permanent Account Number (PAN), 20% for resident shareholders without PAN or invalid PAN. Hence, the shareholders are advised to update their PAN with the Depository Participant, if shares are held in Demat form, and with the Registrar and Share Transfer Agent of the Company, if shares held in Physical form. Tax shall be deducted at source @20% (plus applicable surcharge and cess) on dividend paid to Foreign Institutional Investors (“FIIs”) and Foreign Portfolio Investors (“FPIs”) in view of specific provision under section 196D of Act.
Further, the shareholders have an option to apply to the Company for non-deduction of TDS or deduction of TDS at a lower rate by providing the necessary documents to the Company as prescribed in Annexure-A to this letter. The Non-Resident shareholders who wish to take benefit of the rates as prescribed under the Double Tax Avoidance Agreement (‘DTAA’) shall also be required to submit the necessary documents as prescribed in Annexure-A.
The above referred documents, duly completed and signed are required to be e-mailed to the Registrar & Transfer Agent (“RTA”) of the Company, M/s. Link Intime India Private Limited through registered e-mail address by quoting your Name, Folio number / Demat Account No., Number of shares and PAN details at its email address email@example.com on or before the Record Date fixed for the respective dividend in order to enable the Company to determine and deduct appropriate TDS / withholding tax. Further, October 24, 2020 would be the Record Date for payment of Interim Dividend for the Financial Year (2020-21), as approved by the Board of Directors of the Company, in its meeting held on October 16-17, 2020. Hence, to take any benefit of the TDS on the said interim dividend, the above documents should be submitted on or before October 24, 2020.
In case where the originally signed documents are required to be submitted, the same should be submitted to our RTA at its Mumbai/ New Delhi Address (Mr. Amit Kumar Banerjee - Associate Vice President, M/s. Link Intime India Private Limited, Unit- HCL Technologies Limited, C-101, 247 Park, L B S Marg, Vikhroli (West), Mumbai- 400083 or to Link Intime India Pvt. Ltd, Noble Heights, 1st floor, Plot No NH-2, C-1 Block, LSC, near Savitri Market, Janakpuri, New Delhi- 110058 within the above prescribed time limit. No communication on the tax determination/ deduction shall be entertained in respect of the dividend declared after the above time limit.
All communications/ queries in this respect should be addressed and sent to our RTA, Link Intime India Private Limited at its email address mentioned above.
Shareholders may note that in case the tax on said dividend is deducted at a higher rate in absence of receipt, or insufficiency of the aforementioned details/documents from you, an option is available to you to file the return of income as per Income Tax Act, 1961 and claim an appropriate refund, if eligible.
In order to know the amount tax deducted, the Company shall be sending the TDS certificate in respect of tax deducted to its shareholders after payment of dividend in due course. Alternatively, the shareholders can also check Form 26AS from their e-filing accounts at https://incometaxindiaefiling.gov.in.
For HCL Technologies Limited
List of Documents to be submitted for non-deduction of Tax at Source of applying concessional Rates of TDS
|S. No.||Category||Documents required under the Income Tax Act, 1961 for applying concessional Rates of TDS/ Nil TDS||Mode of submission|
Certificate under section 197 of the Act
Form 15G/ 15H (in respect of sections 197A(1) & 197A(1C) of the Act respectively.
One xerox copy
Two copies in original
|2||Non-Resident Individuals /Foreign Nationals/ Foreign Banks, Erstwhile OCBs (Other than FPI/FII)||
Certificate under section 195 or 197 of the Act
Tax Residency Certificate issued by the Revenue/ Tax Authorities of the country of which the shareholder is Resident, for the year in which dividend is to be received & Form 10F as per the Act, and Self-Declaration – No PE and beneficial Owner
One xerox copy
One copy each of all document in Original
|3||HUFs/ Trust/ Trusts/Associations/ Resident Bodies Corporates/ Commercial Banks/ Indian Financial Institutions/ Clearing Members||Certificate under section 197 of the Act||One xerox copy|
|4||Foreign bodies corporate||Certificate under section 195 or 197 of the Act||One xerox copy|
|5||Mutual Funds||Certificate that Mutual Fund is specified under section 10(23D) of the Act.||One xerox copy|
|6||Insurance Companies||Attested copy of the valid IRDAI registration certificate.||One xerox copy|
|7||Alternative Investment Fund||As per CBDT Notification No. 51/2015 dated 25.06.2015, tax shall not be deducted on any amount paid to AIF, which are covered under clause (a) of Explanation 1 of section 115UB of the Act, being in the nature of income other than Profits and Gains from Business and Profession. Please provide a Certificate in this regard. (One copy)||One xerox copy|
(Formats of the Form 15G/15H for resident shareholders and Form 10F/Self-Declaration(s) for non-resident shareholders are enclosed herewith for your reference.)