Companies such as Hero MotoCorp, Marico, Jyoti Laboratories, Reliance Industries, Shoppers Stop and Dishman Pharmaceuticals declared interim dividend on Thursday
March 10 wasn't just another day at Dalal Street in Mumbai. 47 companies scheduled their board meetings to consider and declare interim dividends.
Many companies, including the likes of Hero MotoCorp, Marico, Reliance Industries and Shoppers Stop announced interim dividends in a bid to beat the April 1 deadline when Finance Minister's dividend tax proposal comes into effect. More than 60 companies have already approved dividend payouts to shareholders and fixed record date. This includes 38 companies that met on Wednesday which include Oil and Natural Gas Corp. (ONGC), Piramal Enterprises Ltd, The Phoenix Mills Ltd, Siyaram Silk Mills Ltd, and IRB Infrastructure Developers Ltd, and Torrent Pharmaceuticals Ltd, according to the report.
In various filings to the stock markets on Thursday, the following companies announced interim dividends:
Hero MotoCorp declared an interim dividend of Rs 40 per equity share for the financial year ending March 31.
FMCG firm Marico declared its third interim dividend of Re 1 per equity share for the current financial year.
While, Jyothy Laboratories declared an interim dividend of Rs 4 per equity share for the financial year 2015-16.
Reliance Industries declared an interim dividend of Rs 10.50 per equity share.
Shoppers Stop declared interim dividend of Rs 0.75 per share for the financial year 2015-16.
Dishman Pharmaceuticals and Chemicals Ltd declared an interim dividend of Rs 2 per equity share for the financial year 2015-2016.
So far, nearly 275 companies since the budget announcement have considered the payment of interim dividend, according to a Mint report.
Some of these companies include Bharat Forge, Piramal Enterprises, Indiabulls Housing Finance, Bajaj Auto, Godrej Industries and Eicher Motors.
Kirloskar Industries too is expected to declare interim dividend on Thursday.
Coal India (CIL) on March 5 declared an interim dividend of Rs 27.40 per share and the total outgo will be Rs 20,830 crore, including dividend tax
Jaitley, during the budget speech on February 29, 2016 had introduced an additional 10% tax on individuals earning dividend income of over Rs 10 lakh. The government in the budget proposed that in addition to Dividend Distribution Tax (DDT) paid by the companies, tax at the rate of 10% of gross amount of dividend will be payable by the recipients, that is, individuals, HUFs and firms receiving dividend in excess of Rs 10 lakh per annum.
It is this tax that the companies are trying to beat by offering a rushed interim dividend to their investors before the end of current financial year. The reason for this is that many of these companies have promoters which hold a large portion of the shares and earn significant amounts through dividend payments.
However, companies will have to ensure that these dividends are credited on or before March 31 to beat the new tax. If the payments are credited after the date they will attract the additional tax charge.
Anish Thacker, tax partner at EY in the Mint report said that a flurry of dividends have been declared in the past when the provisions for taxing dividend have been amended. For instance, just before the dividend distribution tax was reintroduced with effect from 1 June 2003, dividend payments had picked up, Thacker noted. He added that this is a common practice.
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