Select Page

TDS on Dividends

NON-RESIDENT SHAREHOLDERS

Tax is deducted at the source of dividend payment to non-resident shareholders if the non-resident shareholders submit and register the following documents with the Company/Company’s RTA – MUFG Intime India Private Limited (previously known as Link Intime India Private Limited).

Sr. No. Particulars Rate of Deduction of Tax at Source Documents Required (if any)
1 Foreign Institutional Investors (FIIs) / Foreign Portfolio Investors (FPIs) 20% (plus applicable surcharge and cess) FPI registration number/certificate.
2 Other Non-resident shareholders 20% (plus applicable surcharge and cess) or tax treaty rate, whichever is beneficial To avail of a beneficial rate of tax as per applicable tax treaty, the following documents would be required:

  1. Copy of the ‘Tax Residence Certificate’ of the shareholder’s country of residence valid for the relevant financial year. In case the TRC is furnished in a language other than English, it must be translated from such other language to English, and thereafter, a duly notarised and apostilled copy must be provided.
  2. Copy of the PAN Card allotted by the Indian Income Tax authorities duly self-attested.
  3. Copy of electronically filed Form No. 10F in the income tax portal for the relevant financial year, along with acknowledgement in the format as attached.
  4. Copy of self-declaration by the shareholder for non-existence of permanent establishment/ fixed base in India
  5. Self-declaration by the shareholder regarding the satisfaction of the place of effective management (POEM), principal purpose test, General Anti Avoidance Rule (GAAR), Simplified Limitation of Benefit test (wherever applicable), as regards the eligibility to claim recourse to concerned Double Taxation Avoidance Agreements.
  6. Declaration under section 199 of Income Tax Act 1961 read with Rule 37BA of Income Tax Rules, 1962, where the credit of TDS deducted by the company is to be reported in the name of the beneficial owner of the Dividend Income, which is other than the person whose name is in the shareholder details as per RTA

(Note: Application of beneficial tax treaty rate shall depend upon the completeness of the documents submitted by the non-resident shareholder and review to the satisfaction of the Company)
3 Indian Branch of a Foreign Bank NIL Lower/nil tax deduction certificate u/s 195(3) obtained from Income Tax Authority. Self-declaration confirming that the income is received on its account and not on behalf of the Foreign Bank.
4 Overseas Trust 20% (plus applicable surcharge and cess) The overseas trust can also be given the tax treaty rate. However, this can be litigated; hence, on a conservative basis, withholding on dividends paid to overseas trusts should be as per the Income Tax Act of 1961 only.
5 Availability of Lower/Nil tax deduction certificate issued by Income Tax Department u/s 197 of Income Tax Act, 1961 The rate specified in the Certificate Lower/Nil tax deduction certificate obtained from Income Tax Authority
Top