Sudarshan Chemical Industries : Communication to Shareholders on TDS - Withholding Tax on Final Dividend

Communication to Shareholders on Tax Deduction at Source / Withholding tax on Dividend

Deduction of tax at source on final dividend

We are pleased to inform you that the Board of Directors of Sudarshan Chemical Industries Limited ("the Company") at its Meeting held on 23rd May, 2023 has recommended a Final Dividend of ₹1.50/- per Equity Share of face value ₹2.00/- each (75%) for the financial year ended 31st March, 2023, for the approval of shareholders at the ensuing 72nd Annual General Meeting of the Company. The said final dividend shall be payable to such shareholders holding shares as on the Record Date which shall be communicated separately.

In terms of the provisions of the Income Tax Act, 1961, ("the Act"), dividend paid or distributed by a Company on or after 1st April, 2020 is taxable in the hands of the shareholders. The Company shall therefore be required to deduct tax at source at the time of payment of dividend. The deduction of tax at source will be based on the category of shareholders and subject to fulfilment of conditions as provided herein below:

• For Individual resident shareholders

Tax will be deducted at source ("TDS") under Section 194 of the Act at 10% on the amount of final dividend payable unless exempt under any of the provisions ofthe Act. However, in case of resident

shareholders, TDS would not apply if the aggregate of	total final dividend distributed/paid to them by
the Company during a financial year does not exceed	₹5,000/-.

Tax will not be deducted at source in cases where a shareholder provides Form 15G (applicable to all individual) / Form 15H (applicable to an individual above the age of 60 years), provided that the eligibility

conditions are met. Blank Form 15G	and 15H are attached herewith and can be downloaded from this
communication. Please note that	all fields mentioned in the Form are mandatory	and the Company
may	reject the forms submitted,	if it does not fulfil the requirement of the law.

Needless to mention, valid Permanent Account Number ("PAN") will be mandatorily required. Shareholders who are required to link Aadhaar number with PAN as required under section 139AA(2) read with Rule 114AAA, should compulsorily link the same. If, as required under the law, PAN is not linked with Aadhaar by 30th June 2023 then such PAN will not be considered w.e.f. 1st July 2023 and shall attract higher rate of TDS under section 206AA of the Act. Please ignore if you have already linked Aadhar with your PAN.

• For other Resident Shareholders (other than Individual):-
  NIL / lower tax shall be deducted on the final dividend payable to following resident shareholders on submission of self-declaration (as per formats attached) as listed below:

1. Insurance companies: Declaration that the provisions of Section 194 of the Act are not applicable to them along with self-attested copy of registration certificate and PAN card.

1. Mutual Funds: Declaration by Mutual Fund shareholder eligible for exemption u/s 10(23D) of the Income- tax Act, 1961 along with self-attested copy of registration documents and PAN card.

1. Alternative Investment Fund (AIF) established in India: Declaration that the shareholder is eligible for exemption under section 10(23FBA) of the Act and they are established as Category I or Category II AIF under the SEBI regulations, along with copy of self-attested registration documents and PAN card.
2. New Pension System Trust: Declaration along with self-attested copy of documentary evidence supporting the exemption and self-attested copy of PAN card.
3. Other shareholders - Declaration along with self-attested copy of documentary evidence supporting the exemption and self-attested copy of PAN card.

vi.	Shareholders who have provided a valid certificate issued u/s. 197 of the Act for lower / nil rate
	of deduction or an exemption certificate issued by the income tax authorities along with
	Declaration.

• For non-resident shareholders (including Foreign Portfolio Investors)
  Tax is required to be withheld in accordance with the provisions of Section 195 and section 196D of the Act at applicable rates in force. As per the relevant provisions of the Act, the tax shall be withheld at 20% (plus applicable surcharge and cess) on the amount of final dividend payable. However, as per Section 90 of the Act, a non-resident shareholder has the option to be governed by the provisions of the Double Tax Avoidance Agreement ("DTAA") between India and the country of tax residence of the shareholder, if they are more beneficial to the shareholder. For this purpose, i.e. to avail the Double Tax Avoidance Agreement (DTAA) benefits, the non-resident shareholder will have to provide the following:
• 1. Self-attestedcopy of PAN card, if any, allotted by the Indian Income Tax Authorities.
  2. Copy of Tax Residency Certificate ("TRC") (for the period April 2022 to March 2023) (refer format) obtained from the tax authorities of the country of which the shareholder is resident.
  3. Form 10F filed electronically on the Indian Income Tax web portal pursuant to Notification no. 03/2022 dated 16th July 2022 and a subsequent notification dated December 12, 2022 issued by the Central Board of Direct Taxes (CBDT), as required under the Income-tax Act, 1961. (Please note that the shareholders who have PAN may not be eligible for DTAA benefit if the e-filed Form 10F is not furnished. However, pursuant to the Notification dated March 28, 2023, CBDT exempted those non-residents who are not having PAN and are not required to have PAN as per the law from mandatory e-filing of Form 10F online until September 30, 2023, and such non- residents may make this statutory compliance of filing Form 10F in manual form as was being done prior to issuance of the Notification No. 3/2022 till September 30, 2023 only) [Format of the declaration (only for shareholders not having PAN or are not required to obtain PAN in India) (refer format).
  4. Self-declaration(refer format) by the non-resident shareholder of meeting DTAA eligibility requirement (for the period April 2023 to March 2024) and satisfying beneficial ownership requirement (Non-resident having PE in India would need tocomply with provisions of section 206AB of the IT Act).
  5. In case of Foreign Portfolio Investors, self-attested copy of SEBI registration certificate.
  6. In case of shareholder being tax resident of Singapore, please furnish the letter issued by the competent authority or any other evidences demonstrating the non- applicability of Article 24 - Limitation of Relief under India-Singapore Double Taxation Avoidance Agreement (DTAA) including meeting of all conditions laid down by DTAA.

The self-declarations referred to in point nos. (iii) to (iv) are attached herewith and can be downloaded from this communication.

Application of beneficial DTAA rate shall depend upon the completeness and satisfactory review by the Company, of the documents submitted by non-resident shareholders and meeting requirement of the Act read with applicable DTAA. In absence of the same, the Company will not be obligated to apply the beneficial DTAA rate at the time of tax deduction on final dividend.

• Section 206AB of the Act

Rate of TDS @10% u/s 194 of the Act is subject to provisions of section 206AB of Act (effective from July 1, 2021) which introduces special provisions for TDS in respect of non-filers of income-tax return. As provided in section 206AB, tax is required to be deducted at the highest of following rates in case of payments to specified persons:

• at twice the rate specified in the relevant provision of the Act; or
• at twice the rate or rates in force; or
• at the rate of 5%.

Where sections 206AA and 206AB are applicable simultaneously i.e. the specified person has not submitted the PAN as well as not filed returns; the tax shall be deducted at the higher of the two rates prescribed in these two sections.

The term 'specified person' is defined in sub section (3) of section 206AB of theAct who satisfies the following conditions:

• A person who has not filed the income tax return for two previous years immediately prior to the previous year in which tax is required to be deducted, for which the time limit of filing of return of income under section 139(1) of the Act has expired; and
• The aggregate of TDS and TCS in his case is ₹50,000 or more in each of these two previous years.

The non-resident who does not have thepermanent establishment is excluded from the scope of a specified person.

The Company will check the PAN and Return status on the Bulk compliance functionality provided by the Govt and continue to deduct TDS at the appropriate rates.

To summarize, final dividend will be paid after deducting the tax at source as under:

1. NIL for resident shareholders receiving final dividend upto ₹5,000/- or in case Form 15G / Form 15H (as applicable and duly completed) along with self-attestedcopy of the PAN card is submitted.
2. 10% for other resident shareholders in case copy of PAN card is provided/available.
3. 20% for resident shareholders if valid PAN is not available.
4. Tax will be assessed on the basis of documents submitted by the non-resident shareholders.
5. 20% plus applicable surcharge and cess for non-resident shareholders in case the relevant documents are not submitted.
6. Lower/ NIL TDS on submission of the valid certificate issued under section 197 of the Act.
7. Relaxation from deduction of tax at higher rate under section 206AA, post receipt of Declaration under Rule-37BC,Income-tax Rules.

Aforesaid rates will be subject to applicability of section 206AB of	the Act.
In terms of Rule 37BA of Income Tax Rules 1962, if final dividend income on which	tax	has	been
deducted at source is assessable	in the hands of a person other	than the deductee, then such
deductee should file declaration with	Company in the manner	prescribed	by	the	Rules.

In case tax on final dividend is deducted at a higher rate in the absence of receipt or defect in any of the aforementioned details / documents, you will be able to claim refund of the excess tax deducted by filing your income tax return. No claimshall lie against the Company for such taxes deducted.

• Kindly note that the aforementioned documents in the format provided by company can be uploaded on the RTA's portal athttps://linkintime.co.in/formsreg/submission-of-form-15g-15h.htmlor through their web site www.linkintime.co.in> Investor Services > Tax Exemption Registration > select '"Sudarshan Chemical Industries Limited" and follow theregistration process as guided therein or can be forwarded to [e-mail] or before 29th July, 2023. The shareholders can also download the Forms from website of the company i.e. https://www.sudarshan.com/notices.php. No communication on the tax determination /deduction shall be entertained after 29th July, 2023.

In case tax on final dividend is deducted at a higher rate in the absence of receiptof the aforementioned details / documents, you would still have the option of claiming refund of the excess tax paid at the time of filing your income tax returnby consulting your tax advisor. No claim shall lie against the Company for such taxes deducted. Shareholders will be able to see the credit of TDS in Form 26AS,which can be downloaded from their e-filing account at https://incometaxindiaefiling.gov.in.

Updation of PAN, Email address and other details:

All the Shareholders are requested to update the residential status, registered email address, mobile number, category and other details with their relevant depositories through their depository participants, if the shareholding is in demat form or with the Company's Registrar & Transfer Agent ('RTA'), Link Intime India Private Limited, if the shareholding is held in physical form, as may be applicable. The Company is obligated to deduct TDS based on the records made available by National Securities Depository Limited or Central Depository Services (India) Limited (collectively referred to as 'the Depositories') in case of shares held in demat mode and with the RTA in case of shares held in physical mode and no request will be entertained for revision of TDS return.

Updation of Bank Account for Payment of Dividend:

While on the subject, we request you to submit / update your bank account details with your Depository Participant, in case you are holding shares in the electronic form. In case your shareholding is in the physical form, you will have to submit a scanned copy of a covering letter, duly signed by the first shareholder, along with a cancelled cheque leaf with your name and bank account details and a copy of your PAN card, duly self-attested, with the Company's R & T Agent, M/s. Link Intime India Private Limited, C-101, 247 Park, L.B.S. Marg, Vikhroli West, Mumbai - 400083, Tel.: [phone] , Email: [e-mail]. This will facilitate receipt of dividend directly into your bank account. In case the cancelled cheque leaf does not bear your name, please attach a copy of the bank pass-book statement, duly self attested. In absence of bank account with requisite particulars, the dividend warrants or demand drafts as may be applicable will be dispatched to you by post/courier.

We seek your co-operation in the matter.Thanking You,

Yours faithfully,

For SUDARSHAN CHEMICAL INDUSTRIES LIMITED

Sd/-

MANDAR VELANKAR

GENERAL COUNSEL AND COMPANY SECRETARY

FORM NO. 15G

[See section 197A(1), 197A(1A) and rule 29C]

Declaration under section 197A (1) and section 197A(1A) to be made by an individual or a person(notbeing a company or firm) claiming certain incomes without deduction of tax.

PART I

Name of Assessee (Declarant)

PAN of the Assessee

Status	Previous Year ( P. Y. ) ( for which declaration is	Residential Status
		beingmade )
Flat/Door/Block No.	Name of Premise			Road/Street/Lane		Area/Locality
Town/City/District		State			PIN			Email
Telephone No. ( with STD Code	Whether assessed to tax under the Income-	Yes:		No:
)and Mobile No.			tax Act, 1961
		If yes, latest assessment year for which
					assessed

Estimated income for which this declaration is made

Estimated total income of the P.Y. in which income mentioned in column 16 to be included

Details of Form No. 15G other than this form filed during the previous year, if any

Total No. of Form No. 15G filed	Aggregate amount of income for which Form No.15G filed

Details of income for which the declaration is filed

Sl. No.		Identification number of relevant	Nature of	Section under which
	investment / account, etc	income	tax is deductible
	1
	2
	3
	4
	5
	6
	7

Amount of income

Signature of the Declarant

Declaration/Verification