Life Insurance Corporation of India (LIC) has issued an important intimation regarding Tax Deduction at Source (TDS) on its final dividend for the Financial Year 2025-26. Shareholders are advised to ensure their PAN details are updated to facilitate correct TDS application. The communication outlines various scenarios for resident and non-resident members, specifying rates, required documentation, and deadlines for submission to avoid higher TDS deductions.
LIC Announces Final Dividend Tax Information
The Life Insurance Corporation of India (LIC) has released a detailed communication for its members regarding the Tax Deduction at Source (TDS) applicable to the final dividend for the Financial Year 2025-26. This information is crucial for shareholders to understand the process and documentation required for appropriate tax deductions.
Dividend Details and Record Date
The Board of Directors of LIC recommended a final dividend of ₹10 per equity share for FY 2025-26. This is subject to member approval at the Annual General Meeting (AGM) scheduled for July 27, 2026. The dividend will be paid within 30 days from AGM approval, by August 25, 2026. The record date for eligibility is June 25, 2026.
TDS on Dividend Income
Dividend income is taxable, and LIC is required to deduct TDS at applicable rates as per the Income Tax Act, 2025. These rates vary based on the shareholder’s residential status and entity classification (Individual, Firm, Company, HUF, Trust). The Corporation will use PAN details registered with depositories or the RTA to apply the correct TDS rates.
For Resident Members
- Members with valid PAN: TDS will be deducted at 10%.
- Members without PAN or invalid PAN: TDS will be deducted at 20%.
Resident Individual Members
- No TDS if total dividend for Tax Year 2026-27 does not exceed ₹10,000.
- Exemption is possible by submitting Form 121, provided eligibility conditions are met.
- Exemption is also possible with an exemption certificate from the Income Tax Department.
Resident Members Other Than Individuals
No TDS is applicable if the required details and documents are provided for categories like Insurance Companies, Alternative Investment Funds (AIF), Mutual Funds, National Pension System (NPS) Trusts, and Corporations established by or under the Central Act. Specific self-declarations and supporting documents are required for each category.
For Non-Resident Members
- TDS will be deducted at 20% (plus surcharge and cess) as per applicable rates.
- Lower or Nil tax rates may apply if a certificate under Section 395(1) of the Income Tax Act, 2025 is submitted.
- Non-resident members can opt for beneficial Double Tax Avoidance Agreement (DTAA) rates by submitting specific documents and declarations by June 24, 2026. These include PAN card details, Tax Residency Certificate (TRC), self-declaration of no Permanent Establishment in India, confirmation of being the ultimate economic recipient, and electronically filled Form 41.
Important Instructions and Deadlines
Shareholders are urged to ensure their bank account and KYC details are updated with their Depository Participants (DPs) or RTA (KFin Technologies Limited) for dividend payments, as physical payout options have been discontinued. Linking of PAN with Aadhaar is mandatory; failure may result in a 20% TDS deduction.
For members holding shares under multiple accounts with a single PAN, the highest TDS rate applicable to any category will be applied to the entire holding. Members seeking lower tax rates or exemptions must submit required documents by June 24, 2026.
LIC and its RTA will verify all submitted documents. Failure to furnish necessary details by the deadline will result in the application of higher TDS rates. No revisions or refunds can be processed after deduction. Shareholders may claim refunds from the Income Tax Department when filing their annual returns.
Members can verify TDS credit on the Income Tax Portal and download Form 131 (new TDS certificate) or view Form 16B (AIS) to reconcile transactions.
Shareholders are responsible for any misrepresentation or omission of information, and must indemnify the Corporation. This information is for general guidance and not legal or tax advice; consult a tax consultant for specific implications.
Source: BSE
