Motherson Sumi Wiring India Limited has issued a crucial communication to its shareholders regarding the deduction of tax at source (TDS) on dividends for the financial year 2025-26. The company outlines the applicable TDS rates and the necessary documentation required from both resident and non-resident shareholders to potentially avail lower tax rates or exemptions. This information is vital for shareholders to ensure accurate tax deductions on their dividend income.
Important Shareholder Notice: Dividend TDS for FY 2025-26
Motherson Sumi Wiring India Limited has released a detailed communication for its shareholders concerning the deduction of tax at source (TDS) on dividend payments for the financial year 2025-26. This announcement is in line with the Income-tax Act and aims to inform shareholders about the applicable tax rates and the documents required to potentially benefit from lower rates or exemptions, particularly in accordance with Double Taxation Avoidance Agreements (Tax Treaties).
Dividend Details and Tax Implications
The Board of Directors recommended a dividend of Re. 0.58 per equity share for the financial year ended March 31, 2026. This dividend, subject to shareholder approval, will be paid after the Annual General Meeting. As per the Income-tax Act, dividends declared and paid are taxable for the Tax Year 2026-27 (FY 2026-27). The company is mandated to deduct TDS at applicable rates, which will vary based on the shareholder’s residential status and submitted documentation.
Resident Shareholder Tax Requirements
For resident shareholders, the applicable TDS rates are as follows:
- Valid PAN: 10%. TDS will not be deducted if the total dividend does not exceed Rs. 10,000. Shareholders are encouraged to update their PAN details with depositories or the RTA.
- No / Invalid PAN: 20%. Shareholders must update their PAN with depositories or RTA.
- PAN not linked with Aadhaar (Inoperative PAN): 20%. Failure to link Aadhaar with PAN will result in an inoperative PAN for TDS purposes.
- Submission of Form 121 by resident individual shareholder: Nil. Form 121, along with a copy of the PAN card and declaration, is required.
- Availability of lower/NIL deduction certificate: Rate provided in certificate. Shareholders need to submit a valid lower/NIL withholding tax certificate obtained from the tax authority.
Specific requirements are also detailed for Mutual Funds, Insurance Companies, certain corporations, and Alternative Investment Funds, typically requiring self-declarations and registration certificates.
Non-Resident Shareholder Tax Requirements
Non-resident shareholders have the option to be governed by the provisions of the Double Taxation Avoidance Agreement (Tax Treaty) between India and their country of tax residence, if more beneficial. The documents required to avail these benefits include:
- Non-resident Members (including FPIs/FPIs): 20% (plus surcharge and cess) or Tax Treaty Rate. Required documents include a copy of the Indian Tax Identification number and a Tax Residency Certificate (TRC).
- Non-Resident Shareholders of Notified Jurisdictional Area: 30%. Not Applicable for TRC benefits.
- Alternative Investment Fund (Category III in International Financial Services Centre): 10% (plus applicable surcharge and cess). Requires a self-declaration and documentary evidence.
- Foreign Portfolio Investors (FPIs) Category I: 10% (plus applicable surcharge and cess). Requires a copy of valid PAN and documentary evidence.
- Sovereign Wealth Funds and Pension Funds: Nil. Requires proof of notification and self-declaration.
- Subsidiary of Abu Dhabi Investment Authority (ADIA): Nil. Requires self-declaration and compliance evidence.
- Availability of Lower/NIL Tax Deduction Certificate: Rate specified in certificate. Requires a certificate from the tax authority and a copy of a valid PAN card.
Shareholders are advised to ensure that all submitted documents are self-attested and provided in a single PDF file uploaded on the RTA portal or sent physically by July 14, 2026, 1700 Hours (IST). Any discrepancy or incomplete information may result in tax deduction at the maximum applicable rate.
Important Notes for Shareholders
- For dividend income assessable to tax in the hands of a person other than the registered shareholder, a declaration must be furnished according to Rule 203(2) of the Income-tax Rules, 2026.
- All documentation and queries should be addressed to KFintech at [email protected].
- The company reserves the right to reject incomplete documents or those submitted after the deadline of July 14, 2026.
- Recording a valid PAN is mandatory; absence of a valid PAN will lead to a 20% deduction.
- Shareholders are strongly advised to consult their own tax consultant for specific tax implications. This communication is for general information purposes only and does not constitute legal or tax advice.
Source: BSE
