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Namakkal Raghavendran (CEO)     12 April 2020

Tds on dividends

The recent amendments to IT law has made dividends from companies liable to TDS if the total payment from a company exceeds Rs.5000 in the year. Now companies are intimating the share holders that they will apply TDS on every dividend payment even if the dividend is less than Rs.5000 on the plea that when a dividend is paid at some point in the FY they cannot foresee the total amount of such dividends for the complete year and TDS will be difficult if it exceeds Rs.5000 finally. There may be thousands like me who rarely receive dividends exceeding Rs.5000. So this unilateral move by the companies hits the small shareholders. Is this not an infringement of the law as passed by the Parliament?

 2 Replies

Hemant Agarwal ( Mumbai : 9820174108)     13 April 2020

1. First Dividend given is 4700/-  (TDS not deducted)
2. Final Dividend given is 400/-
3. Total Dividend given is 5100/-
4. Total TDS deductable is 510/-  (on total dividend of 5100/-)

5. How will Co. deduct 510/- from the payout of Final Dividend of 400/-

6. APPREHENSIVELY, the Co. decision of deducting TDS on every dividend payout is right and in line with the Govt. directive.

7. AS IT IS, the Dividend receiver can always claim back any exessive TDS that was deducted, by filing his personal Income Tax Returns.

Keep Smiling .... Hemant Agarwal

Namakkal Raghavendran (CEO)     13 April 2020

In my experience, holding nearly  shares of  30 companies, just two or three declare interim dividends. So the scenario you are mentioning is more theoretical. In such rare cases where the TDS exceeds the last didvidend declared, the company can demand the payment of the excess TDS from the shareholder. If the shareholder fails to pay the due amount , it can put a hold on the shares. I can understand the difficulty if all these transactions were being handled manually but with Information Technology to even small shops, this shouldn't present a problem. For the sake of this small extra effort required on the part of the company, tens of thousands of small sharholders should not be burdened with the task of having to keep track of TDS on even small amounts of dividends, and having to enter the details meticulously in the tax return. This is particularly harsh for senior citizens.

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