Tax on Final Dividend 2023-24
As per Indian Income Tax Act, 1961 (“Act”) dividend paid and distributed by a company is taxable in the hands of shareholders. Thus, companies paying dividend are required to withhold tax at the applicable tax rates for Resident shareholder at 10% with valid Permanent Account Number (PAN) or at 20% without/invalid PAN and for Non-Resident shareholders at the rates prescribed under the Act or Tax Treaty, read with Multilateral Instruments, if applicable. No withholding of tax is applicable if the dividend payable to resident individual shareholders is up to Rs. 5,000 p.a. within a financial year.
Further the Finance Act 2021 has brought in section 206AB effective from July 01, 2021, wherein tax would be deducted at higher rates (twice the specified rate) on payment of dividends to specified person. According to the provisions of section 206AB, a specified person means a person who has not furnished their returns of income for the previous year immediately preceding the financial year in which tax is required to be deducted and for which the time limit for furnishing the return of income under section 139(1) of the Act has expired and the aggregate of tax deducted at source and collected at source is rupees fifty thousand or more in the said previous year. Accordingly, applicable tax deduction rates for specified person would be twice the prescribed rates. For Resident specified shareholder it would be 20% and for Non-Resident specified shareholders (who has not furnished a declaration stating no permanent establishment in India) the tax deduction rates would be 40% plus applicable surcharge and cess as prescribed under the Act.
As per Section 139AA of the Income Tax Act, every person who has been allotted a PAN and who is eligible to obtain Aadhaar, shall be required to link the PAN with Aadhaar. In case of failure to comply to this, the PAN allotted shall be deemed to be invalid/inoperative and he shall be liable to all consequences under the Act and tax shall be deducted at higher rates as prescribed under the Act.
The Board of Directors of Infosys Limited (the Company) in their meeting held on April 18, 2024, have recommended a final dividend of Rs. 20.00 per equity share and special dividend of Rs. 8.00 per equity share for the financial year ended March 31, 2024 subject to shareholders’ approval at the ensuing Annual General Meeting to be held on June 26, 2024.
As it is important for the Company to receive the relevant information and declarations from shareholders to determine the rate of tax deduction, the Company has sent out communications to shareholders as per the classification given below (please click below hyperlink for details):
- Resident individual shareholders with valid PAN
- Resident individual shareholders without PAN or invalid PAN
- Resident mutual funds and insurance company shareholders
- Resident non-individual shareholders (Company, Firms, Trust, HUF, AOP, Bank, etc.)
- Non-resident shareholders
Company has released the notification in the newspaper providing information about the record date for dividend. The same is available here. If you are a shareholder of the Company as on the record date (i.e., May 31, 2024), and the dividend receivable by you is taxable under the Income Tax Act, 1961, the company shall be obligated to deduct taxes at source on the dividend payable to you as per the applicable provisions under the Income Tax Act, 1961.
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 and shareholders holding shares in physical mode are requested to furnish details to the Company’s registrar and share transfer agent KFin Technologies Limited.
The company has enabled a shareholder portal for shareholders to upload the relevant tax documents for purposes of tax deduction at source. We request shareholders to upload the relevant documents till June 07 ,2024. No documents will be considered after June 07, 2024. We request shareholders to kindly take note of it accordingly.
The shareholders are requested to go through the list of documents to be provided by each types of shareholders provided at shareholder portal https://www.infosys.com/investors/shareholder-services/dividend-tax.html.
All the documents submitted by you on or before June 07, 2024 will be verified by us and we will consider the same while deducting the appropriate taxes if they are in accordance with the provisions of the Income Tax Act, 1961.
The shareholder portal is available here: Link for the shareholder portal.
Instructions and guidelines for the shareholder portal are available here. Link for instructions and guidelines.
Further, for the format of prescribed tax forms click here
Shareholder can reach us for clarification at dividend.tax@infosys.com
For information on taxes on previous dividends, please click here
