Dividend Payout and TDS Explained: What You Need to Know [Calculator]

Dividend TDS Calculator

Introduction

Got an email recently about a company I hold shares in. May and June is the month where shareholders get lots of dividend intimation emails from the companies (Company’s Registrar & Share Transfer Agent – RTA) of which we hold shares.

It’s about the dividend they are planning to give out.

And also about how tax will be deducted on it. Thought it would be useful to share what I understood from by reading this email.

So, the company’s board has suggested a dividend of Rs.20 per share. This is for the financial year that just ended in March 2025.

For this kind of transaction, the shareholders need to give their approval at the Annual General Meeting (AGM). The AGM is scheduled for July 15, 2025.

If everything goes as planned, those who hold the shares on the record date, which is July 8, 2025, will get this dividend.

You’ll receive it either directly in your bank if your shares are in demat form, or through other means if you hold physical shares.

Now, the other important part is taxes.

As per the income tax rules, any dividend given after April 1, 2020, is taxable in your hands. Because of this, the company has to deduct tax at source (TDS) before they pay you the dividend.

The rate of TDS depends on a few things.

1. Resident Shareholders

If you are a resident shareholder, meaning you live in India, the TDS rate is usually 10%. But this is only if you have given your Permanent Account Number (PAN) and it’s valid in their records.

If you haven’t provided your PAN, or if it’s not validly registered with your demat account, the TDS will be higher, at 20%.

So, it’s crucial to make sure your PAN details are up to date.

However, there are some cases where no tax will be deducted for resident individuals.

• One is if the total dividend you are expected to receive during the entire financial year (2025-26) is not more than Rs.10,000.
• Another way to avoid TDS is by submitting Form 15G (if you are or below 60 years old) or Form 15H (if you are above 60 years old). These are basically declarations that your total income is below the taxable limit. But make sure you meet all the conditions and fill the forms correctly. The company can reject them if they are not properly filled.
• For some resident non-individual shareholders, like insurance companies or mutual funds, there might be no TDS either, provided they submit certain declarations and documents. This usually involves proving their specific status and providing their PAN and relevant registration details. It seems like a bit of paperwork, but it can save you from immediate tax deduction.
• And of course, if you have a certificate from the Income Tax Department that allows for a lower or zero rate of TDS, you need to provide that along with a declaration.

2. Non-Resident Shareholders

For those of you who are non-resident shareholders – NRI types, including Foreign Portfolio Investors (FPIs), the tax rules are a bit different.

The company will have to withhold tax as per Indian tax laws. The tax rate is generally about 20% (plus any applicable surcharge and cess).

However, there’s a good thing here.

If India has a Double Tax Avoidance Agreement (DTAA) with the country where you are a tax resident, and if the terms of that agreement are more beneficial to you, you can choose to be governed by those DTAA rules.

But to do this, you’ll need to provide a few documents.

• These include a self-attested copy of your PAN (if you have one)
• A Tax Residency Certificate from your country. It will be a filled Form 10F, and a self-declaration stating that you meet the DTAA eligibility and are the beneficial owner of the shares.
• Foreign Portfolio Investors also need to give a copy of their SEBI registration.

It’s important to note that the company isn’t automatically obligated to apply the DTAA rates. They will do so only after they have reviewed the documents you provide and are satisfied with them.

So, make sure to get all your paperwork in order.

3. Key Dates and Things to Remember

The record date to be eligible for the dividend is Tuesday, July 8, 2025.

If you need to submit Form 15G/15H or other tax-related documents, you should do it online through the link provided by the company (in the email). The last date for submission is Friday, July 4, 2025.

They are very clear that any submissions after this date won’t be considered for the TDS calculation.

Also, they won’t accept these documents via email, so the online link is the way to go.

4. Keeping Details Updated

The email also reminds everyone to keep their personal details up to date.

If you hold shares in demat form, you need to update the following details with the Depository Participant:

• PAN,
• Email address,
• Bank account details, etc.

If you have physical shares, you need to provide this information to the company’s Registrar and Share Transfer Agent. This is important so that the dividend gets credited to the correct account and you receive all communications properly.

They’ve also mentioned that they will deduct TDS based on the information they have on record. So, if your details are not updated, you might end up with a higher TDS. In that case, you’d have to claim a refund when you file your income tax return.

The company won’t be responsible for any excess tax deducted due to incorrect or missing information.

Finally

So, there you have it.

A breakdown of the dividend announcement and the tax implications. It looks like a pretty straightforward process, but it’s always good to be aware of the details, especially the deadlines for submitting any forms to avoid higher TDS.

Hope this post was help fund. I though to write this explanatory blog post explaining what details are mentioned in an dividend intimation email received from companies.

Let me know if you had any similar experiences or have any thoughts on this. For the moment, you can use the abve dividend TDS calculator.