CEAT Limited details dividend TDS rates and compliance under Income Tax Act
CEAT Limited informed shareholders about the TDS provisions on dividends under the Income Tax Act, 2025, for FY 2026-27. Resident individuals with valid PAN face 10% TDS, while those without PAN or Aadhaar linkage face 20%. Non-residents are subject to 20% TDS but can claim DTAA benefits with proper documentation. The company specified deadlines and submission procedures for various resident and non-resident categories.
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CEAT Limited has communicated the tax deduction at source (TDS) provisions applicable to dividends distributed under the Income Tax Act, 2025. The company outlined the compliance requirements and tax rates for resident and non-resident shareholders for the financial year 2026-27. The communication emphasizes the necessity of valid documentation to ensure appropriate tax deduction and avoid higher withholding rates.
Resident Shareholders
For resident individual shareholders, TDS will be deducted at 10% on the dividend amount, provided the shareholder holds a valid Permanent Account Number (PAN) linked with Aadhaar. This deduction is governed by Section 393(1), Table Sr no. 7 of the Act. However, TDS will not apply if the aggregate dividend distributed during the financial year does not exceed ₹10,000. Shareholders wishing to claim exemption from TDS must submit Form 121 and other prescribed documents.
If a shareholder does not hold a PAN or if the PAN is not linked with Aadhaar, the TDS rate increases to 20% as per Section 397(2) of the Act. Resident shareholders are advised to ensure their Aadhaar is linked to their PAN to avoid the higher rate. Forms such as Form 121 can be submitted electronically via depository participants NSDL or CDSL.
Non-Individual Residents
Resident shareholders classified as non-individuals, such as insurance companies, mutual funds, and Alternative Investment Funds (AIFs), may qualify for nil or lower TDS rates. This concession is subject to the submission of self-declarations and self-attested copies of registration certificates and PAN cards. Specific declarations are required for entities like the New Pension System Trust and finance companies located in International Financial Services Centres (IFSC).
| Category | TDS Rate | Conditions/Documents |
|---|---|---|
| Insurance companies | Nil/ Lower Tax | Self-Declaration, self-attested registration certificate, and PAN card. |
| Mutual Funds | Nil/ Lower Tax | Self-Declaration for exemption under Schedule VII, registration documents, and PAN card. |
| Alternative Investment Fund (AIF) | Nil/ Lower Tax | Declaration for exemption under Schedule V, proof of Category I or II AIF status, and PAN card. |
| New Pension System Trust | Nil/ Lower Tax | Declaration, documentary evidence supporting exemption, and PAN card. |
| IFSC Finance Company | Nil/ Lower Tax | Declaration in Form 1, self-attested registration certificate, and PAN card. |
Non-Resident Shareholders
Non-resident shareholders, including Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs), are subject to a TDS of 20%, plus applicable surcharge and cess, under Section 393(2) of the Act. However, they may opt for the beneficial tax rates provided by the Double Taxation Avoidance Agreement (DTAA) between India and their country of residence. To avail these treaty benefits, shareholders must submit a Tax Residency Certificate (TRC), self-declaration in Form No. 41 valid for FY 2026-27, and a declaration meeting treaty eligibility requirements.
Additionally, non-resident shareholders must provide a self-attested copy of their PAN card, if allotted, or specific details as per Rule 217 of the Income-tax Rules, 2026, if PAN is unavailable. FIIs and FPIs must also provide a self-attested copy of their SEBI registration certificate. The application of beneficial DTAA rates is contingent upon a satisfactory review of these documents by the company.
Compliance and Deadlines
The company has stated that no communication regarding tax determination will be entertained after July 7, 2026. Shareholders holding shares in dematerialized form must update their tax residency status, PAN, and contact details with their depository participants. Those holding physical shares must furnish details to the Registrar and Transfer Agent, NSDL Database Management Ltd. (NDML). The company clarified that it is obligated to deduct tax based on records available from depositories or the RTA and cannot revise TDS returns retrospectively due to shareholder delays.
Historical Stock Returns for CEAT
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.74% | -0.31% | +6.74% | -10.36% | -2.32% | +158.30% |
How will the stricter PAN-Aadhaar linking requirements impact dividend payouts for resident shareholders who fail to comply by the FY 2026-27 deadline?
What potential administrative challenges could CEAT Limited face in verifying DTAA eligibility for non-resident shareholders given the July 7, 2026 cutoff?
Will the new TDS provisions influence foreign portfolio investment flows into CEAT Limited compared to peers with more favorable tax treaties?
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