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Thursday, Mar 07, 2002

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Promoters to save Rs 196 cr in taxes

BL Research Bureau

PROMOTERS of companies that have declared interim dividend since the presentation of the Union Budget could together save an estimated Rs 196 crore in the form of taxes that they would otherwise have had to pay, an analysis by Business Line reveals.

A quick application of the declared percentages of dividends on the respective equities of the 70-odd companies that have declared interim dividend shows that the total quantum of dividend is Rs 2,222.15 crore.

Dividend accruing to promoters from their equity holdings in these companies works out to Rs 933.14 crore.

Applying the tax rate of 21 per cent (peak rate of 31 per cent minus 10 per cent dividend tax which was any way payable), the tax saved is Rs 195.95 crore.

This is an indicative figure, as the actual tax saved would depend on the total taxable income of the promoters.

Companies that have declared dividend now would together be poorer by Rs 222.21 crore, which is the 10 per cent tax they have to pay on total dividend declared.

Assuming that the interim dividend is not declared, this tax amount would have been saved by these companies as they would not suffer distribution tax from the coming fiscal.

The promoters of the following companies would be the biggest beneficiaries of the tax saving: Reliance Industries (Rs 45.51 crore), Reliance Petroleum (Rs 35.64 crore), Tata Steel (Rs 8.16 crore), Bajaj Auto (Rs 7.29 crore) and Tata Power Company (Rs 6.76 crore).

These are the indicative tax savings by the promoters, which have been calculated based on their declared holdings.

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