HFCL Ltd updates shareholders on dividend tax rules post-Finance Act 2020 and provides steps to claim tax exemptions. Full details inside.
HFCL Ltd issued a significant announcement to its shareholders regarding tax deduction on dividend income, following the introduction of amendments under the Finance Act, 2020. This announcement was published on June 19, 2025, on the Bombay Stock Exchange (BSE), and it highlights critical changes in tax treatment and documentation for availing exemptions.
Following the legal change with effect from April 1, 2020, which removed the Dividend Distribution Tax (DDT), dividend income is taxed in the hands of individual shareholders. This development marks a revolutionary departure from the way dividends were treated as exempt for the intent of income tax in India. As such, HFCL is diligently taking its shareholders through the amended compliance process.
What Has Changed for Shareholders?
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Earlier, corporations such as HFCL had to shell out DDT prior to distributing dividends. Nevertheless, after the Finance Act, 2020, shareholders have to self-declare and pay tax on dividends earned, depending on their respective income tax slab.
In its latest communication, HFCL emphasizes that all shareholders are now required to submit proper documentation if they wish to claim exemptions or lower tax rates on their dividend income. This is especially relevant for:
- Non-resident shareholders
- Mutual Funds and Insurance companies
- Entities eligible for exemption under section 197A of the Income Tax Act
The company has emailed all shareholders whose addresses are registered with depositories, the company itself, or its Registrar and Share Transfer Agent (RTA). The email contains detailed instructions on the submission process and required documents.
Online Access and Support
HFCL has also made this shareholder communication available on its official website: www.hfcl.com. This ensures easy accessibility to investors who may not have received the email due to outdated contact information.
To facilitate smooth processing, shareholders are encouraged to:
- Review the dividend tax provisions thoroughly
- Submit valid PAN, tax residency certificates, or declaration forms (as applicable)
- Reach out to the RTA in case of discrepancies
Why This Matters to Investors
For investors, understanding dividend taxation is crucial for accurate tax filing and financial planning. Incorrect or delayed submission of exemption documentation can result in higher Tax Deducted at Source (TDS) on dividend income.
HFCL’s prompt notification reflects its commitment to transparency and regulatory compliance. It also underscores the company’s proactive investor relations practices amid evolving financial regulations.
Key Takeaways
- Dividend income is taxable in the hands of shareholders post-April 2020.
- HFCL has sent detailed email communications with compliance steps.
- Shareholders must act promptly to claim exemptions and avoid unnecessary TDS.
- Full details are also available on HFCL’s official website.
Investors are advised to consult their tax advisors for personalized guidance regarding applicable rates and documentation. This update aligns with SEBI’s and Income Tax Department’s efforts to streamline tax processes and enhance investor awareness.
