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Tax on Final Dividend FY 2022

Income Tax Act, 1961 ('The IT Act') as amended by the Finance Act, 2020, mandates that dividends paid or distributed by a company after April 1, 2020 shall be taxable in the hands of shareholders and the Company shall be required to withhold tax at the applicable tax rates for Resident Shareholder at 10% with valid Permanent Account Number (PAN) or at 20% without PAN/invalid PAN and for Non-Resident Shareholders at the rates prescribed under the IT Act or Tax Treaty. No TDS will be deducted on dividend payable to a resident individual shareholder if the aggregate of the amounts of such dividend, paid during the relevant Financial Year ('FY') i.e. FY 2022-23, does not exceed INR 5,000/-.

A new section i.e. 206AB has been inserted vide Finance Act, 2021 (further amended by Finance Act, 2022) providing for twice the TDS rate specified for the non-filers of income tax return. However, the said proposed provisions will not apply to a non-resident who does not have a permanent establishment in India. The income tax authorities have come up with a list of specified persons i.e. the persons who have not filed their returns as per section 206AB of the IT Act. Accordingly, TDS shall be applicable at twice the rate of TDS specified in case of shareholders who would be present in the specified persons list.

The Board of Directors of Info Edge (India) Limited (the Company) in their meeting held on May 27, 2022 have recommended a final dividend of Rs.5/- per equity share for the financial year ended March 31, 2022 subject to shareholder's approval at the ensuing Annual General Meeting to be held on August 26, 2022.

If you are a shareholder of the Company as on the record date (i.e. August 19, 2022), and the dividend receivable by you is taxable under the IT 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 IT Act, 1961.

Accordingly, in order to enable the Company to determine the appropriate tax rate at which tax has to be deducted at source under the respective provisions of the IT Act, we request you to provide the below-mentioned details and documents as applicable to you on or before Monday, September 5, 2022. The final dividend will be paid subject to same approved by the shareholders of company in the ensuing Annual General Meeting as aforesaid and after deduction of tax at source as determined on the basis of the below-mentioned documents provided by the respective shareholders as applicable to them and being found satisfactory.

A. Resident shareholders:

A.1 Tax deductible at source for Resident Shareholders (other than resident individual shareholders receiving dividend not exceeding INR 5,000 during the FY 2022-23)

Particulars Withholding tax rate Declaration / documents required/Remarks
Valid PAN updated with the Depository Participant in case shares are held in dematerialized form; or Registrar and Transfer Agent ('RTA') in case shares are held in physical form and no exemption sought by Shareholder 10% N.A.
No PAN/ Invalid PAN with the Depository Participant in case shares are held in dematerialized form; or RTA in case shares are held in physical form and no exemption sought by Shareholder. 20% N.A.
TDS rate specified for non-filers of income-tax return 20% Resident shareholders who have not filed their return of income for 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 section 139(1) has expired and the aggregate of tax deducted at source and tax collected at source exceeds INR 50,000 or more in the said previous year, TDS at higher rate as prescribed under the IT Act will be applicable.
Availability of lower/nil tax deduction certificate issued by Income Tax Department u/s 197 of the IT Act Rate specified in Lower tax withholding certificate obtained from Income Tax Department
  • Copy of PAN card
  • Copy of lower tax withholding certificate obtained from Income Tax Department.
Self-declaration that income-tax returns for immediately preceding financial year has been filed.

A2. A.2 Nil Tax Deductible at Source on dividend payment to Resident Shareholders if the Shareholders submit documents mentioned in the below table with the Company/RTA on or before September 05, 2022.

Particulars Declaration / documents required
An Individual furnishing Form 15G/ 15H Copy of PAN card
Declaration in Form No. 15G (applicable to an individual who is less than 60 years) / Form 15H (applicable to an Individual who is 60 years and above), fulfilling prescribed conditions.
Shareholders to whom section 194 of the IT Act does not apply such as LIC, GIC, etc..
  • Copy of PAN card
  • Self-declaration(Format enclosed in Annexure 1), along with adequate documentary evidence (e.g, registration certificate), to the effect that the no tax withholding is required as per provisions of section 194 of the IT Act.
Shareholder covered u/s 196 of the IT Act such as Government, RBI, Mutual Funds specified u/s 10(23D), corporations established by Central Act and exempt from Income Tax.
  • Copy of PAN card
  • Self-declaration (Format enclosed in Annexure 1), along with adequate documentary evidence, substantiating applicability of 196 of the IT Act
Category I and II Alternative Investment Fund (AIF)
  • Copy of PAN card
  • Self-declaration (Format enclosed in Annexure 1) that AIF's income is exempt under Section 10 (23FBA) of the IT Act and they are governed by SEBI regulations as applicable to Category I or Category II AIFs, along with copy of registration certificate.
Any other entity exempt from withholding tax under the provisions of section 197A of the IT Act (including those mentioned in Circular No. 18/2017 issued by CBDT)
  • Copy of PAN card
  • Self-declaration (Format enclosed in Annexure 1 and 2) along with adequate documentary evidence, substantiating the nature of the entity
  • Copy of the lower tax withholding certificate obtained from Income Tax Department (except those covered by Circular 18/2017)

B. NON-RESIDENT SHAREHOLDERS:

Tax deductible at source for non-resident shareholders.

Category Withholding tax rate Declaration / documents required
Foreign Institutional Investors (FIIs) / Foreign Portfolio Investors (FPIs) 20% (plus applicable surcharge and cess) or tax treaty rate whichever is beneficial
  • Self-declaration (Format enclosed in Annexure 3) along with adequate documentary evidence substantiating the nature of the entity.
  • To avail beneficial rate of tax treaty following tax documents would be required:

  • 1. Copy of PAN card (if available)
    2. Copy of Tax Residency certificate issued by revenue authority of country of residence of shareholder for the financial year 2022-23 (covering the period from April 1, 2022 to March 31, 2023)
    3. In case a Tax Residency certificate is issued on a calendar year basis and a copy for calendar year 2022 is not available, please furnish copy of the application filed with the revenue authority of country to residence to obtain Tax Residency certificate.
    4. Self-Declaration in Form 10F  (Format enclosed in Annexure 5)
    5. Self-declaration for no permanent establishment / fixed base / business connection in India, place of effective management, beneficial ownership and eligibility to avail tax treaty benefit [on shareholder's letterhead]   (Format enclosed in Annexure 6).
    (Note: Application of beneficial Tax Treaty Rate shall depend upon the completeness and satisfactory review by the Company of the documents submitted by the shareholders. In case the documents are found to be incomplete, the Company reserves the right to not consider the tax rate prescribed under the tax treaty).
Alternative Investment Fund - Category III located in International Financial Services Centre 10% (plus applicable surcharge and cess)#
  • Copy of PAN card (if available)
  • Self-declaration (Format enclosed in Annexure 4) along with adequate documentary evidence substantiating the nature of the entity.
Other Non-resident shareholders (except those who are tax residents of Notified Jurisdictional Area) 20% (plus applicable surcharge and cess) or tax treaty rate whichever is beneficial To avail beneficial rate of tax treaty following tax documents would be required:
1. Copy of PAN card (if available)
2. Copy of Tax Residency certificate issued by revenue authority of country of residence of shareholder for the financial year 2022-23 (covering the period from April 1, 2022 to March 31, 2023)
3. Self-Declaration in Form 10F  (Format enclosed in Annexure 5)
4. Self-declaration for no permanent establishment / fixed base / business connection in India, place of effective management, beneficial ownership and eligibility to avail tax treaty benefit[on shareholder's letterhead]  (Format enclosed in Annexure 6)
(Note: Application of beneficial Tax Treaty Rate shall depend upon the completeness and satisfactory review by the Company of the documents submitted by the non-resident shareholders. In case the documents are found to be incomplete, the Company reserves the right to not consider the tax rate prescribed under the tax treaty).
Non-Resident Shareholders who are tax residents of Notified Jurisdictional Area as defined u/s 94A(1) of the IT Act 30% NA
Sovereign Wealth funds and Pension funds notified by Central Government u/s 10(23FE) of the IT Act NIL
  • Copy of the notification issued by CBDT substantiating the applicability of section 10(23FE) of the Act issued by the Government of India.
  • Self-Declaration (Format enclosed in Annexure 7 & 8)that the conditions specified in section 10(23FE) have been complied with.
Subsidiary of Abu Dhabi Investment Authority (ADIA) as prescribed under section 10(23FE) of the IT Act NIL Self-Declaration (Format enclosed in Annexure 9) substantiating the fulfillment of conditions prescribed under section 10(23FE) of the IT Act.
Availability of Lower/NIL tax deduction certificate issued by Income Tax Department u/s 195 or 197 of the IT Act. Rate specified in Lower tax withholding certificate obtained from Income Tax Department Copy of the lower tax withholding certificate obtained from Income Tax Department.

#In case PAN is not updated with the Company's RTA i.e, Link Intime India Private Limited or depository; or PAN is not available; and information sought in the declaration are not provided, higher rate of withholding tax as per section 206AA shall be applied.

The documents such as Form 15G/ 15H, documents under section 196, 197A, FPI Registration Certificate, Tax Residency Certificate, Lower Tax certificate etc. can be uploaded on the link https://linkintime.co.in/formsreg/submission-of-form-15g-15h.html on or before September 5, 2022 to enable the Company to determine the appropriate withholding tax rate applicable. In case where copy of documents (such as, PAN card, Registration certificate, etc.) is provided, the copy should be self-attested by the Shareholder or its authorized signatory. Shareholders holding shares of the Company as on the record date i.e. Friday, August 19, 2022 shall only be required to submit the documents/declarations. Any communication in relation to tax rate determination/deduction received post September 5, 2022 shall not be considered in view of stipulated timelines of dividend payment.

Please note that three cells are available [(a) for KYC, (b) Exemption Form 15G/ 15H etc, and (c) for any other supporting document] on the aforesaid link for uploading the documents. In case you wish to upload multiple documents for each category, kindly scan them all in one file and upload them in the relevant category cell up to the maximum file size of 1MB. Kindly note that the Company will not accept any declaration/document on any email address. Please send a mail at dividend.tds@infoedge.com for any issues in uploading the documents

The Company will issue soft copy of the TDS certificate to its shareholders through email registered with the Company / Link Intime India Private Limited post payment of the dividend. Shareholders will be able to download the tax credit statement from the Income Tax Department's website https://incometaxindiaefiling.gov.in (refer to Form 26AS