Comments
As many as 321 companies, including five public sector undertakings, made a last-gasp dash in March and declared dividends amounting to ₹44,975 crore to beat the new dividend tax, which kicked in from April 1.
The amount is an eight-fold jump over the same period last year, when 27 companies had announced dividend worth ₹5,854 crore, according to data provided by Capital Line.
Finance Minister Arun Jaitley had proposed in Budget 2016-17 that if the dividend income earned by a resident individual, HUF (Hindu Undivided Family) or firm exceeds ₹10 lakh, it will be taxed at the rate of 10 per cent in the hands of the recipient.
Of these 321 companies that paid dividends, only 129 –– or fewer than 50 per cent –– are from the BSE 500. The average promoter shareholding in these companies was 60 per cent. Some companies have announced interim as well as special dividends.
The total tax saved by private promoters on the basis of this ‘dividend rush’ in March stands at ₹1,452 crore.
A similar trend was seen in the years 2007 and 2002 when the DDT was hiked to 15 per cent from 12.5 per cent and the dividends were made taxable in shareholders’ hands.
Public sectors companies such has Coal India, ONGC, NMDC, Nalco and HPCL contributed about 42.5 per cent of the total dividend amount announced in March.
PSUs usually pay hefty dividends in the March quarter to help the government bridge the fiscal deficit gap.
“About 80 per cent of these 321 companies, including Force Motors, CESC and Dalmia Bharat, do not have a track record of paying interim dividend in the past three-four financial years,” said G Chokkalingam, founder, Equinomics Research and Advisory.
Promoters’ share of the total dividend announced by privately held companies jumped to 56.25 per cent compared to 34.8 per cent in the same month a year ago. The highest dividend amount was paid by Coal India at ₹17,307 crore; among private companies, Hindustan Zinc declared the highest dividend, at ₹10,141 crore. Reliance Industries, Bajaj Auto, Hero MotoCorp and HDFC were among the four other private companies that paid out big dividends.
Promoters’ stake ranged between 34 and 65 per cent in these companies. Except HDFC, the promoters of four companies also got the highest amount of dividend.
DLF’s promoters were the fifth-largest dividend recipients.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.