Tax on Final Dividend 2019-20

 

Dear Shareholder,

Subject: Strides Pharma Science Limited (‘Strides’/ ‘the Company’) - Final Dividend 2020 - Deduction of tax at source on dividend pay-out

We hope that you and your family are doing well and are safe and healthy.

We wish to inform you that the Board of Directors of the Company in their meeting held on May 20, 2020 recommended a final dividend of Rs. 2/- per equity share having nominal value of Rs. 10/- each for the financial year (‘FY’) ended March 31, 2020, subject to approval at the ensuing Annual General Meeting to be held on August 20, 2020.

As you are aware that as per the Income-tax Act, 1961, (‘the Act’), amended by the Finance Act, 2020, dividend paid or distributed by a Company on or after April 1, 2020 shall be taxable in the hands of the shareholders. Therefore, the Company shall be required to deduct taxes at source (‘TDS’) at the rates applicable to each category of shareholder as per the relevant provisions of the Act.

As per the latest information available with the depositories (NSDL/ CDSL) / Registrar and Share Transfer Agent (‘KFin Technologies Private Limited’ or ‘KFin’), you are a shareholder of the Company. If you remain as a shareholder as on record date (July 27, 2020), the dividend receivable by you would be taxable under the Act. Hence, we request you to kindly verify the correctness of your records (including residential status, Permanent Account Number (‘PAN’) and bank account details) and update the same with your depository participant (if you hold shares in dematerialized mode) or the Registrar and Share Transfer Agent (if you hold shares in physical mode), at the earliest.

In case your shareholding is in the physical form, you will have to submit a scanned copy of a covering letter, duly signed by the first shareholder, along with a cancelled cheque leaf with your name and bank account details and a copy of your PAN card, duly self-attested, with KFin. This will facilitate receipt of dividend directly into your bank account. In case the cancelled cheque leaf does not bear your name, please attach a copy of the bank pass-book statement, duly self-attested.

We also request Members holding shares in dematerialized mode to register their email addresses and mobile numbers with their relevant depositories through their depositary participants. Members holding shares in physical mode are requested to furnish their email addresses and mobile numbers with the Company's Registrar and Share Transfer Agent KFin Technologies Private Limited (formerly Karvy Fintech Private Limited) (herein referred as ‘RTA’), at https://ris.kfintech.com/email_registration/ or investors@strides.com.


For Resident Shareholders

Tax is required to be deducted on dividend income under section 194 of the Act at 7.5% (as against 10% prescribed in the Act) pursuant to a Press Release dated May 13, 2020 issued by Central Board of Direct Taxes stating that TDS rates on the amount paid or credited to residents during the period from May 14, 2020 to March 31, 2021 to be reduced by 25%.

However, please note that if you do not furnish PAN or PAN is not valid, it would be considered as PAN not being available and tax would be withheld at 20% as per section 206AA of the Act.

Resident Individual Shareholders

No tax shall be deducted on the dividend payable to resident individuals, if:

  1. Total dividend to be received by you from Strides during the FY 2020-2021 does not exceed Rs. 5,000/.

  2. In order to provide exemption from TDS on the dividend payable to you, you should submit all the following documents, if eligible, as per the relevant provisions of the Act:

    1. Form No. 15G (applicable to any person other than a Company or a Firm); Form No. 15H (in case of Resident Individual’s age is 60 years or more) provided that all eligibility conditions are met – The link to download the forms is provided below.

      Please note that PAN is mandatory while providing Form No. 15G/ Form No. 15H.

    2. Lower withholding tax / Nil tax certificate for the FY 2020-21, if any, obtained from the Income Tax authorities;

If the above documents are found in accordance with the provisions of the Act, the same shall be considered while deducting the taxes.

Resident Non – Individual Shareholders

In case your income is subject to lower rate of TDS, or is exempt under the Act, you should submit the following, as applicable:

  1. For Mutual Funds/ Insurance companies/ AIF (with Category I/ II status): A self-declaration in the format as provided in the link below (as relevant) along with the documentary evidence.
  2. For Others (Resident Company / Firm / HUF / AOP / Trust / Local Authority / Artificial Juridical Person, etc): In case you are a specified person covered under section 196 of the Act or you have tax exemption status under section 197A of the Act read with Circular No. 18/2017, submit a self-declaration as provided in the link below (as relevant) along with the documentary evidence.
  3. Lower withholding tax certificate for the FY 2020-21, if any obtained from the Income Tax authorities;

If the above documents are found in accordance with the provisions of the Act, the same shall be considered while deducting the taxes.


For Non-resident Shareholders

  1. Foreign Institutional Investors (FIIs) / Foreign Portfolio Investors (FPIs)

    As per section 196D of the Act, tax shall be deducted at source at the rate of 20% (plus applicable surcharge and cess). For the purpose of TDS, it may not be possible to consider applicable tax treaty benefits under the Double Taxation Avoidance Agreement (‘DTAA’) between India and the country of your tax residence, in case of FPI/ FIIs since the provisions of the Act do not provide so.

  2. Other Non-resident Shareholders

    Taxes are required to be deducted in accordance with the provisions of section 195 and other applicable provisions of the Act as per the rates in force i.e. the TDS rate shall be at 20% (plus applicable surcharge and cess) on the amount of dividend. However, as per Section 90 of the Act, you have an option to be governed by the provisions of the DTAA between India and the country of your tax residence, if they are more beneficial to you. In case you propose to avail the benefit of DTAA between India and the country of your tax residence, you should submit all the following documents as prescribed under the Act:

    • Self-attested copy of the Permanent Account Number (‘PAN Card’) allotted by the Indian income tax authorities;
    • Self-attested copy of Tax Residency Certificate (‘TRC’) for the FY 2020-21 obtained from the revenue authorities of the country of your residence;
    • Self-declaration in Form No. 10F - If all the details required in this form are not mentioned in the TRC;
    • Self-declaration in the format as provided in the link below that you are eligible to avail the DTAA benefits;
    • Any other document as prescribed under the Act for lower rate of tax, if applicable and as obtained from the India Income Tax authorities.

If the above documents are found in accordance with the provisions of the Income-tax Act, 1961 the same shall be considered while deducting the taxes. Further, please note that the Company is not obligated to apply the beneficial DTAA rates at the time of tax deduction / withholding on the dividend amount. The application of beneficial DTAA rate shall depend upon the completeness and satisfactory review by the Company, of the documents submitted by the Non-resident shareholders.

You may note that the Company on July 15, 2020 notified record date for the purposes of Final Dividend for FY 2019-20 as July 27, 2020 to the Stock Exchanges. We request you to kindly take note accordingly.

Kindly note that the aforementioned documents, where ever applicable for respective category of shareholders above should be uploaded with KFin Technologies Private Limited, the Registrar and Transfer Agent ("KFin") at https://ris.kfintech.com/form15 or emailed to einward.ris@kfintech.com, mentioning the name of the Company i.e., Strides Pharma Science Limited, in the subject line. The above documents should reach us on or before July 28, 2020, in order to enable the Company to determine and deduct appropriate TDS / withholding tax rate.

No communication/ documents on the tax determination/ deduction shall be entertained after July 28, 2020. We request you to kindly take note accordingly.

It may be further noted that in case the tax on the said Final dividend is deducted in the absence of receipt of the aforementioned details/ documents from you, there would still be an option available with you to file the return of income and claim an appropriate refund, if eligible.

The Company shall make arrangements for sending the TDS certificate, when taxes deducted, to the shareholders at their registered email-id in due course, once the dividend payment has been made. Shareholders can also view the TDS credit in Form 26AS, which can be downloaded from the e-filing website of the income-tax department - https://incometaxindiaefiling.gov.in

We seek your co-operation in the matter.

Please reach out to us at investors@strides.com or einward.ris@kfintech.com for any queries.

Thanks and Regards,
For Strides Pharma Science Limited,
sd/-
Manjula Ramamurthy
Company Secretary

 

Forms and Declarations

Form No. 15H
Form No. 15G
Form 10F
Self declaration format for Mutual Funds
Self-declaration format for Insurance
Self-declaration format for AIF with Category I / II status
Self-declaration format for Other Resident Non-Individuals
Self-declaration for Other Non-residents shareholders to avail DTAA benefits
The Company has released the notification in the newspaper providing information about the record date for dividend and the brief on taxation on the dividend. The same is available here,
Click here for the paper notification