HCLTech Limited - Communication of deduction of Tax at Source on Dividend
Dear Shareholder,
In accordance with the provisions of the Income Tax Act, 1961 (‘the 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.
In view of the above, in the current financial year 2024-25, the Company shall be deducting TDS as per applicable provisions and TDS rates, while paying dividends.
A. Resident Shareholders
Tax shall be deducted at source @10% 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 are held in Physical form.
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 2024-25 does not exceed Rs. 5,000.
TDS to be deducted at a higher rate in case of non-filers of Return of Income (Resident Shareholders)
The Finance Act, 2021, had inter alia inserted the provisions of section 206AB of the Act with effect from July 1, 2021. The provisions of section 206AB of the Act require the deductor to deduct tax at higher of the following rates from amount paid/ credited to 'specified person':
- At twice the rate specified in the relevant provision of the Act; or
- At twice the rates or rates in force; or
- At the rate of 5%
The meaning of ‘specified person’, as amended by Finance Act, 2022 with effect from April 1, 2022, is provided in the said section as under:
'Specified person' means a person who has:
- not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted, for which the time limit for furnishing the return of income under sub-section (1) of section 139 has expired; and
- the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in the said previous year.
In view of the above provisions of Section 206AB of the Act, in respect of dividend paid to resident shareholders in the financial year 2024-25, who are liable to be treated as ‘specified person’ basis the output generated from the Compliance Portal of the income-tax department, tax shall be deducted at source at twice the applicable rates.
B. Non-resident Shareholders
Tax shall be deducted at source @20% (plus applicable surcharge and cess) on dividend paid to non-resident shareholders, including Foreign Institutional Investors (‘FIIs’) and Foreign Portfolio Investors (‘FPIs’), in accordance with the provisions of section 195 and section 196D of the Act respectively.
Tax shall be deducted at source @10% (plus applicable surcharge and cess) on dividend paid to ‘specified fund’ as defined in clause (c) of the Explanation to clause (4D) of section 10, in accordance with the provisions of section 196D of the Act.
In case the non-resident shareholders, including FIIs and FPIs, wish to take benefit of the rates as prescribed under the applicable Double Tax Avoidance Agreement (‘DTAA’), they shall be required to submit the necessary documents as prescribed in Annexure-A. In that case, the tax shall be deducted @20% (plus applicable surcharge and cess) or the rate of tax provided in DTAA for such income, whichever is lower.
TDS to be deducted at a higher rate in case of non-filers of Return of Income (Resident Shareholders)
In view of the provisions of Section 206AB of the Act excluding a non-resident not having a permanent establishment (“PE”) in India from the definition of ‘specified person’, the non-resident shareholders shall be required to submit the necessary documents as prescribed in Annexure-A, in the absence of which tax shall be deducted at source at twice the applicable rates (plus applicable surcharge and cess).
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 to this e-mail.
C. TDS to be deducted at higher rate in case of non-linkage of PAN with Aadhaar
As per Section 139AA of the 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 with this, the PAN allotted shall be deemed to be invalid/inoperative and tax shall be deducted at the rate of 20% as per the provisions of section 206AA of the Act. Shareholders may visit https://www.incometax.gov.in/iec/foportal/ for FAQ issued by Government on PAN Aadhar linking.
The above referred documents, duly completed and signed (in xerox or original, as advised in below table) should be sent to the Registrar & Transfer Agent (“RTA”) of the Company, M/s. Link Intime India Private Limited as directed in Annexure-A.
- In case of Form 15G/H two copies of the same along with self-attested copy of the PAN card should be submitted to our RTA at its Mumbai/ New Delhi address (Mr. Pradeep Mokale - Assistant 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 Private Limited, Noble Heights, 1st floor, Plot No NH-2, C-1 Block, LSC, Near Savitri Market, Janakpuri, New Delhi- 110058 on or before the relevant Record Date of the respective divdend.
- In case of other tax exemption declarations/forms the same should be sent to hcldivtax@linkintime.co.in through registered e-mail of the shareholder quoting Name, Folio number/ Demat Account No., Number of shares and PAN details of the shareholder on or before 5:00 P.M. (IST) of the relevant Record Date of the respective dividend in order to enable the Company to determine and deduct appropriate TDS/ withholding tax.
No communication on the tax deduction documents shall be entertained, if the same is received after the time limit given for receipt of the documents.
The declarations under Rule 37BA of the Income Tax Rules, 1962, if applicable, need to be submitted on or before the above Record date for enabling the Company to consider the same.
All communications/ queries in this respect should be addressed and sent to our RTA, Link Intime India Private Limited via e-mail at hcldivtax@linkintime.co.in.
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 required from the shareholder, an option is available to the shareholder to file the return of income as per Income Tax Act, 1961 and claim appropriate refund, if eligible.
To view the process for filing E-form 10F for NRIs (with PAN) click here.
To view the process for filing E-form 10F for NRIs (without PAN) click here.
To download Form 15G click here.
To download Form 15H click here.
To download Form No PE and Beneficial Ownership Declaration click here.
To download Form No PE declaration for non-resident shareholders for the purposes of Section 206AB of the Act click here.
In the event of any income tax demand (including interest, penalty, etc.) on the Company arising due to any declaration, misrepresentation, inaccurate or omission of any information provided by the shareholder, such shareholder will be responsible to indemnify the Company and, provide the Company with all information / documents and co-operation in any appellate proceedings.
In order to know the amount of tax deducted, the Company shall be sending, after payment of dividend, the TDS certificate in respect of tax deducted to its shareholders in due course. Alternatively, the shareholders can also check Form 26AS from their e-filing accounts.
Annexure-A
List of Documents to be submitted for non-deduction of Tax at Source or for applying for concessional Rates of TDS, subject to condition that provisions of Section 206AB of the Act are not applicable in the case of a shareholder
| S.No. | Category | Documents required under the Income Tax Act, 1961 for applying for concessional Rates of TDS/ Nil TDS | Mode of submission |
|---|---|---|---|
| 1 | Resident Individuals | Certificate under section 197 of the Act Or Form 15G/ 15H [in respect of sections 197A(1) & 197A(1C) of the Act respectively] | One xerox copy Two copies in original along with self-attested copy of PAN be submitted through post to RTA/Company |
| 2 | Non-Resident Individuals/ Foreign Nationals/ Foreign Banks/ Foreign Body Corporates, Erstwhile OCBs/ FPI/ FII (For the purposes of claiming beneficial rate of tax under the applicable DTAA) | Certificate under section 195 or 197 of the Act Or a. 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, NOTES: The Company is not obligated to apply the beneficial DTAA rates at the time of tax deduction/withholding on the dividend amount. Application of beneficial DTAA Rate shall depend upon the completeness and satisfactory review by the Company, of the documents submitted by the non-resident shareholder. | One xerox copy to be sent to One copy each of all documents color scanned or electronically signed as applicable to be sent to hcldivtax@linkintime.co.in |
| 3 | Non-resident shareholders (For the purposes of section 206AB 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 receivedandNo PE Declaration | One xerox copy in color scanned to be sent to hcldivtax@linkintime.co.in |
| 4 | HUFs/ Trust/ Trusts/Associations/ Resident Bodies Corporates/ Commercial Banks/ Indian Financial Institutions/ Clearing Members | Certificate under section 197 of the Act | One xerox copy to be sent to hcldivtax@linkintime.co.in |
| 5 | Foreign bodies corporate | Certificate under section 195 or 197 of the Act | One xerox copy to be sent to hcldivtax@linkintime.co.in |
| 6 | Mutual Funds | Certificate that Mutual Fund is specified under section 10(23D) of the Act. | One xerox copy to be sent to hcldivtax@linkintime.co.in |
(Formats of the Form 15G/15H for resident shareholders and Self-Declaration(s) for non-resident shareholders are enclosed herewith for your reference.)
