TDS on Dividend

The Board of Directors of Balrampur Chini Mills Limited (´the Company´) in their meeting held on 2nd February, 2021 has approved the interim dividend of INR 2.50/- per equity share for the financial year 2020-2021. Record date for the Interim Dividend is fixed as Friday, 12th February, 2021.

Pursuant to the amendments introduced in the Income-tax Act, 1961 (´the Act´) vide Finance Act, 2020, w.e.f. April 1, 2020, the Company will be required to withhold taxes at the prescribed rates on the dividend paid to its shareholders.

No tax will be deducted on payment of dividend to the resident individual shareholders if the total dividend, paid during Financial year (´FY´) 2020-21, does not exceed INR 5,000/-

The withholding tax rate would vary depending on the residential status, category of the shareholder and is subject to provision of requisite declarations / documents received by the Company.

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 2020-21)

S No. Particular Withholding tax rate Declaration / documents required
1

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

7.5%(Applicable for FY 2020-21. Rate of 10% shall be applicable from FY 2021-22 onwards )

- Self-attested copy of PAN card / Aadhaar Card (If not updated with depository/RTA)

2

No / 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%

- Self-attested copy of PAN card / Aadhaar Card is required to apply for the withholding tax rate of 7.5% instead of 20%

3

Availability of lower/nil tax deduction certificate issued by Income Tax Department u/s 197 of the Act

Rate specified in Lower tax withholding certificate obtained from Income Tax Department

- Self-attested copy of PAN card / Aadhaar Card

- Copy of lower tax withholding certificate obtained from Income Tax Department

A.2 Nil Tax Deductible at Source on dividend payment to Resident Shareholders if the Shareholders submit documents mentioned in column no.3 of the below table with the Company/ RTA

S No. Particular Declaration / documents required
1

Shareholder submitting Form 15G/ 15H

- Self-attested copy of PAN card / Aadhaar 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.

2

Shareholders to whom section 194 of the Act does not apply such as Insurance companies, eg. LIC, GIC, etc.

- Self-attested copy of PAN card

- Self-declaration (Format enclosed in Annexure 1), along with adequate documentary evidence (e.g, registration certificate), to the effect that no tax withholding is required as per provisions of section 194 of the Act.

3

Shareholder covered u/s 196 of the Act such as Government, RBI, Mutual Funds specified u/s 10(23D), corporations established by Central Act and exempt from Income Tax.

- Self-attested copy of PAN card

- Self-declaration (Format enclosed in Annexure 1), along with adequate documentary evidence, substantiating applicability of 196 of the Act.

4

Category I and II Alternative Investment Fund (AIF)

- Self-attested copy of PAN card

- Self-declaration (Format enclosed in Annexure 1) that AIF′s income is exempt under Section 10 (23FBA) of the Act and they are governed by SEBI regulations as applicable to Category I or Category II AIFs, along with copy of registration certificate.

5

Any other entity exempt from withholding tax under the provisions of section 197A of the Act (including those mentioned in Circular No. 18/2017 issued by CBDT)

- Self-attested copy of PAN card

- Self-declaration by shareholders under section 194/ 196/ 197A of the Income Tax Act, 1961 (Format enclosed in Annexure 1) for availing the NIL tax rate deduction on dividend payment under the Income Tax Act, 1961

- Self-declaration by individual Sikkimese resident shareholder covered under section 10(26AAA) of the Income Tax Act, 1961 (Format enclosed in Annexure 2) for availing the NIL tax rate deduction on dividend payment 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)

A. NON-RESIDENT SHAREHOLDERS::

Tax deductible at source for non-resident shareholders.

S No. category Withholding tax rate Declaration / documents required
1

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

20% (plus applicable surcharge and cess)

- Self-attested copy of PAN card (if available)

- Self-declaration (Format enclosed in Annexure 3) along with adequate documentary evidence substantiating the nature of the entity

2

Alternative Investment Fund ­Category III located in International Financial Services Centre

10% (plus applicable surcharge and cess)#

- Self-attested copy of PAN card (if available)

- Self-declaration (Format enclosed in Annexure 4) along with adequate documentary evidence substantiating the nature of the entity

3

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. Self-attested 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 2020-21 (covering the period from April 1, 2020 to March 31, 2021)

3. Self-Declaration in Form 10F (Format enclosed in Annexure 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 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).

4

Non-Resident Shareholders who are tax residents of Notified Jurisdictional Area as defined u/s 94A(1) of the Act

30%

NA

5

Sovereign Wealth funds and Pension funds notified by Central Government u/s 10(23FE) of the 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 and 8) that the conditions specified in section 10(23FE) have been complied with

6

Subsidiary of Abu Dhabi Investment Authority (ADIA) as prescribed under section 10(23FE) of the Act

NIL

- Self-Declaration (Format enclosed in Annexure 9) substantiating the fulfillment of conditions prescribed under section 10(23FE) of the Act

7

Availability of Lower/NIL tax deduction certificate issued by Income Tax Department u/s 195 or 197 of the 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

A. NON-RESIDENT SHAREHOLDERS::

Tax deductible at source for non-resident shareholders..

# In case PAN is not updated with the Company′ RTA 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.

Notes:

The aforesaid 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://ris.kfintech.com/form15, on or before 12th February, 2021 (the record date) to enable the Company to determine the appropriate withholding tax rate applicable. In case where copy of documents (such as, PAN card, Aadhaar Card, Registration certificate, etc.) is provided, the copy should be self-attested by the Shareholder or its authorized signatory. Any communication in relation to tax rate determination/deduction received post the record date shall not be considered.

The Company will issue soft copy of the TDS certificate to its shareholders through email registered with the Company / RTA 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).

Determination of withholding tax rate is subject to necessary verification by the Company of the shareholder details as available with the RTA in case shares are held in physical form; or depository participant in case shares are held in dematerialized form as on the Record Date, and other documents available with the Company / RTA. Shareholders holding shares under multiple accounts under different residential status / category and single PAN, may note that, higher of the tax rate as applicable to different residential status/ category will be considered for their entire shareholding under different accounts.

The documents furnished by the shareholders (such as Form 15G/15H, TRC, Form 10F, Self-Attested Declaration etc.) shall be subject to review and examination by the Company before granting any beneficial rate or NIL Rate. The Company reserves the right to reject the documents in case of any discrepancies or the documents are found to be incomplete.

In case withholding tax is deducted at a higher rate, an option is still available with the shareholder to file the return of income and claim an appropriate refund. No claim shall lie against Company for any taxes deducted by the Company.

In the event of any income tax demand (including interest, penalty, etc.) arising from any misrepresentation, inaccuracy or omission of information provided by the shareholder, the shareholder will be responsible to indemnify the Company and also, provide the Company with all information / documents and co-operation in any tax proceedings.

Kindly note that a declaration must be filed with the Company where the whole or any part of the dividend income is assessable, under the provisions of the Act, in the hands of a person other than the shareholder in accordance with Rule 37BA(2) of the Income-tax Rules, 1962. The declaration must consist of Name, address, PAN of the person to whom credit is to be given and proportion of credit to be given in respect of dividend income. In case the Company does not receive such declaration before the stipulated timelines, it reserves the right to reject such declaration.

Further, the company will withhold taxes as per the stipulated tax laws prevalent at the time of deduction of taxes.

This Communication is not exhaustive and does not purport to be a complete analysis or listing of all potential tax consequences in the matter of dividend payment. Shareholders should consult their tax advisors for requisite action to be taken by them.

Click here Annexure 1 – Declaration for Resident Shareholder (To be declared by resident shareholder for availing the NIL tax rate deduction on dividend payment under the Income Tax Act, 1961)

Click here Annexure 2 – Declaration for Resident Shareholder (To be declared by individual Sikkimese resident shareholder covered under section 10(26AAA) of the Income Tax Act, 1961 for availing the NIL tax rate deduction on dividend payment)

Click here Annexure 3 – Declaration for Foreign Institutional Investors / Foreign Portfolio Investors

Click here Annexure 4 – Declaration for Alternative Investment Fund – Category III Located In International Financial Services Centre

Click here Annexure 5 – Form No. 10F

Click here Annexure 6 – Declaration for Non-Resident Shareholders (To be declared by non-resident shareholder for availing the benefits of lower tax deduction under Section 90 of the Indian Income Tax Act, 1961 (‘Act’) read with the provisions of the Tax Treaty with India and the Multilateral Instrument)

Click here Annexure 7 – Declaration for Sovereign Wealth Funds (To be declared by non-resident shareholder as prescribed under section 10(23FE) of the Income-tax Act, 1961 for NIL deduction on payment of dividend)

Click here Annexure 8 – Declaration for Pension Funds (To be declared by non-resident shareholder as prescribed under section 10(23FE) of the Income-tax Act, 1961 for NIL deduction on payment of dividend)

Click here Annexure 9 – Declaration for Wholly Owned Subsidiary of Abu Dhabi Investment Authority

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