CHENNAI: The rise in dividend distribution tax from 12.5 per cent to 15 per cent in the Union Budget has given rise to expectations that many companies listed on the bourses may come out with the announcement of interim dividends before March 31. As the dividend distribution tax will come into effect from April 1, dividend distributed in the current financial year will not attract the additional tax burden.
Though it may not be possible for many companies to convene board meetings and disburse dividends before this month end, cash rich companies and companies with large promoter holdings may come out with dividend announcements soon.
Reliance Industries has come out with a notification to the Bombay Stock Exchange that a meeting of its board of directors will be held on March 10 to consider declaration of interim dividend on equity shares.
If companies adopt this route the increase in dividend distribution tax will not help the Government to increase its revenues. Also if many companies come out with dividend announcements after this financial year they may reduce the percentage of dividend as compared to the earlier year so as to avoid more tax outgo on this front.
The following are among companies that have scheduled their board meetings to announce interim dividend:
FDC March 10; India Motor Parts March 9; KCP March 14; IPCL March 10.
Reliance Industrial Infrastructure March 10; Ultramarine & Pigments March 16; Zandu Pharma March 10; Nirma March 9; Eicher Motors Marach 10 and Banco Products India March 12.