ONGC - Deduction of Tax at Source on 1st Interim Dividend payable for FY 2023-24

OIL AND NATURAL GAS CORPORATION LIMITED Corporate Identity Number : L74899DL1993GOI054155 Regd. Office: Plot No. 5A-5B, Nelson Mandela Marg, Vasant Kunj, New Delhi – 110 070 Phone No.: 011-26754070 Fax: 011-26129081 Email: secretariat@ongc.co.in;website: www.ongcindia.com

Dear Member(s),   We are pleased to inform you that, the Board of Directors of Oil and Natural Gas Corporation Limited, at its 373rd Meeting held on 10th November 2023, has recommended Interim dividend of ₹5.75 per equity share (i.e., 115%) of ₹ 5/- each for FY 2023-24, which will be paid based on your shareholding as on the record date 21^st November, 2023 fixed for this purpose.   As you are aware, dividend payable to a shareholder is taxable in his hands and is subject to Deduction of Tax at Source (TDS) as per the provisions of the Income-tax Act, 1961. Therefore, Company shall be required to deduct tax at source (TDS) at the time of making the payment of the dividend.   Applicable TDS rates, vary depending on the residential status, category of the shareholder and is subject to submission of requisite declarations / documents to the Company.   Statutory provisions in this regard and the documents / information desired from the shareholders have been brought out as under:   A. TDS deduction on Dividend   In accordance with the provisions of the Act, as amended by the Finance Act, 2020, with effect from April 1, 2020, dividend declared and paid by a company is taxable in the hands of the Members, and, accordingly, the company is required to deduct TDS thereon at the rates prescribed by the Act.   No TDS shall, however, be deductible on dividend payable to a resident individual shareholder if the amount of such dividend, or the aggregate of the amounts of such dividend, paid during the relevant financial year (i.e. FY 2023-24) does not exceed ₹ 5,000.   TDS is also not required to be deducted on dividend payable to:   i. The Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956, in respect of any shares owned by it or in which it has full beneficial interest;

ii. The General Insurance Corporation of India (Corporation) or to any of the four companies, formed by virtue of the schemes framed under sub-section (1) of Section 16 of the General Insurance Business (Nationalization) Act, 1972, in respect of any shares owned by the Corporation or such company or in which the Corporation or such company has full beneficial interest;

iii. Any other insurer in respect of any shares owned by it or in which it has full beneficial interest;

iv. The Government;

v. The Reserve Bank of India;

vi. A Corporation established by or under a Central Act which is under any law for the time being in force exempt from income tax on its income; or

vii. A mutual fund specified u/s. 10(23D) of the Act.   B1. Applicable rates of TDS on Dividend   In the cases of resident shareholders, the applicable TDS rate on dividend as prescribed by the Act is 10%. However, if the shareholder does not furnish its Permanent Account Number (PAN), TDS would be deductible at the rate of 20% (being higher than 10%) as per the provisions of section 206AA of the Act.   In the cases of non-resident shareholders including Foreign Institutional Investors ('FIIs') and Foreign Portfolio Investors (“FPIs”), TDS on dividend would be applicable at the rate of 20% (plus applicable surcharge and health and education cess).   B2. Applicable TDS rates in the cases of PAN not linked with AADHAAR   As per Section 139AA of the Income Tax Act, every person who has been allotted a PAN and who is eligible to obtain AADHAR, shall be required to link the PAN with AADHAR. In case of failure to comply this, the PAN allotted shall be deemed to be invalid / inoperative and tax shall be deducted at the rate of 20% as per the provisions of section 206AA of the Act   B3. Applicable TDS rates in the cases of non-filers of Return of Income   As per the provisions of Section 206AB of the Act, if any TDS is deductible from a “specified person”, then, TDS would be deducted at higher of the following rates-

(a) Twice the rate specified in the relevant provision of the Act;
(b) Twice the rate or rates in force;
(c) At the rate of 5%.

For the above purpose, “specified person” means a person, being a resident or a non-resident having a Permanent Establishment (PE) in India,-

(i) Who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted. For this purpose, the assessment year would be reckoned to be the one for which time limit for filing Return of Income under sub-section (1) of section 139 has expired; and
(ii) The aggregate amount of TDS deducted and TCS collected in the case of such person is ₹ 50,000 or more in the above referred previous year.

Accordingly, if, at the time of deducting TDS, the status of a resident shareholder or a non-resident shareholder (having a PE in India), as shown by the system of the Income-tax Department, is “specified person”, TDS would be deductible at twice the normally applicable rate or 5%, whichever is higher.

Further, if owing to non-availability of PAN of a shareholder who is a “specified person” under section 206AB of the Act, the provisions of section 206AA are also applicable, TDS would be deductible at the rate applicable under section 206AA or under section 206AB of the Act, whichever is higher.

In the cases of resident shareholders, if PAN of a shareholder is not updated, it shall be assumed that the shareholder is a “specified person” for the purpose of section 206AB of the Act and TDS would be regulated accordingly.

Thus, if a non-resident shareholder, who is otherwise liable for higher TDS under Section 206AB, submits a duly signed and verified declaration confirming that he/she does not have a PE in India, the provisions of Section 206AB would not come into play and TDS would be deductible at the normally applicable rate. In absence of such a declaration, TDS would be regulated as per the provisions of section 206AB of the Act.   C. Transferring credit to the beneficial owner   In cases where the shareholder is merely a custodian of the shares and, accordingly, not the beneficial owner of the dividend payable in respect thereof, then, in order to transfer the credit of TDS to the beneficial owner of dividend income, the custodian may provide a declaration prescribed by Rule 37BA of the Income-tax Rules, 1962. The aforesaid declaration shall contain

i. Name, address, PAN and residential status of the person to whom credit is to be given;
ii. Payment in relation to which credit is to be given; and
iii. The reason for giving credit to such person.   D.Submission of application for non/lower deduction of TDS   The shareholders are required to submit an application to the Company for non-deduction of TDS or deduction of TDS at a lower rate by providing the following document/s to the company:   (a) Resident Shareholders

Category of shareholder

Documentation requirement

Mutual Fund

Documentary evidence that the person is covered under the provisions of Section 196 of the Act along with self-attested copy of PAN card and registration certificate.

Insurance Company

Self-declaration that the shareholder has full beneficial interest with respect to the shares owned by it along with self-attested copy of PAN card and copy of registration certificate issued by the IRDAI.

Alternative Investment Fund (AIF)

Self-declaration that the person is covered by Notification No. 51/2015 dated 25th June 2015 and established as Category I or Category II AIF under the SEBI regulations along with self-attested copy of PAN card and registration certificate issued by SEBI.

Government (Central/State)

Documentary evidence that the person, being a Government is covered under Section 196 of the Act.

Any other entity entitled to exemption from TDS under section 10 of the Act

Valid self-attested documentary evidence (e.g., copy of the relevant registration, notification, order, etc.) in support of the entity being entitled to TDS exemption.

Other resident Individual shareholder

- Duly verified Form 15G applicable to an individual who is less than 60 years (Annexure-1) or

Form 15H (Annexure-2) applicable to an Individual who is 60 years and above along with the copy of self-attested PAN.

- Certificate obtained from prescribed authority under Section 197 of the Act. (TAN to be used for this purpose – DELO07879E)

    (b) Non-resident shareholders

Category of shareholder

Documentation requirement

FPIs and FIIs

Update/Verify the PAN and legal entity status as per the Act, if not already done, with the depositories. Provide declaration whether the investment in shares has been made under the general FDI route or under the FPI route.

Any entity entitled to exemption from TDS

Valid self-attested documentary evidence (e.g., copy of the relevant registration, notification, order, etc. by Indian tax authorities) in support of the entity being entitled to exemption from TDS.

Other non-resident shareholders

- Self-attested copy of the PAN allotted by the Indian Income-tax authorities, if any;

As per Section 90 of the Act, the non-resident shareholder has the option to be governed by the provisions of the Double Tax Avoidance Treaty between India and the country of tax residence of the shareholder, if they are more beneficial to them. For this purpose, i.e., to avail Tax Treaty benefits, the non-resident shareholders will have to provide the following-

-Self-attested copy of valid Tax Residency Certificate (TRC) obtained from the tax authorities of the country of which the shareholder is a resident;

- In case details required in form 10F are not mentioned in TRC, Copy of Form 10F electronically filed on the website of Income Tax Department.

-Self-declaration from non-resident, primarily covering the following: -

(i) The non-resident is eligible to claim the benefit of respective Tax Treaty;

(ii) The non-resident receiving the dividend income is the beneficial owner of such income;

(iii) Dividend income is not attributable/effectively connected to any Permanent Establishment (PE) or Fixed Base in India, if any, of the non-resident;

(iv) The non-resident complies with any other condition prescribed in the relevant Tax Treaty and provisions under the Multilateral Instrument ('MLI');

(v) The non-resident does not have a place of effective management in India.

(vi) Application of the beneficial rate of Tax Treaty for TDS is at the discretion of the company and shall depend upon completeness of the documentation and review of the same by the Company.

The non-resident shareholders may also submit Certificate obtained from prescribed authority under section 195/197 of the Indian Income Tax Act (TAN to be used for this purpose – DELO07879E).   The above referred documents duly completed and signed are required to be uploaded on or before the 26th November 2023 on the following link: https://ongc.taxosmart.com/login.jsp. If any issue is encountered in opening the above link, the requisite documentation may be e-mailed to tds_ongc@ongc.co.in by quoting your Name, Folio number/DEMAT Account No. (DP and Client ID both), Number of shares and PAN details, for Interim dividend for FY 2023-24 in order to enable the Company to determine and deduct appropriate TDS / withholding tax. Any further communication in this regard may be addressed to tds_ongc@ongc.co.in   Hence, to enable us to provide DTAA benefits (wherever available) for the purpose of deduction of TDS on dividend, the above documents should be submitted on or before 26th November 2023. No communication on the tax determination/ deduction shall be entertained in respect of the dividend declared after the above time limit.   E. Limitation of liability against such TDS deducted   In case of any income tax demand (including interest, penalty, etc.) arising from any misrepresentation, inaccuracy or omission of information provided / to be provided by the shareholder(s), such shareholder(s) will be responsible to indemnify the Company and also, provide the Company with all information / documents and co-operation in any appellate proceedings. F. Summary To sum up, dividend will be paid after deducting TDS at the following rates: -

Sl. No.

Category of shareholder

Rate of TDS

(i)

Resident individual shareholder receiving dividend up to ₹5,000/- (during a financial year) or in case where duly signed Form 15G / Form 15H (as applicable) along with self-attested copy of the PAN card is submitted by the shareholder.

Nil

(ii)

Resident shareholder (not covered under (i) above) who is having a valid, operative PAN as per section 139AA and not a “specified person” as per section 206AB having a valid PAN.

10%

(iii)

Resident shareholder (not covered under (i) above) not having a valid PAN or having an inoperative PAN as per section 139AA and/or is a “specified person” as per section 206AB.

20%

(iv)

Non-resident shareholder who is not a “specified person” as per section 206AB.

20% (plus applicable surcharge and health and education cess)

(v)

Non-resident shareholder who is a “specified person” as per section 206AB.

40% (plus applicable surcharge and health and education cess)

(vi)

A resident shareholder who submits a certificate under Section 197 or non-resident shareholder who submits a certificate under Section 195/197 of the Act, (including those mentioned in Circular No. 18/2017 issued by CBDT)

As per the directions of the certificate, along with copy of statement-cum declaration in Form no.1

  All communications/queries in this respect should be addressed and sent through link mentioned above.

Shareholders may note further that, in case the tax on dividend is deducted at a higher rate owing to non-receipt or incompleteness of the aforementioned details/ documents, refund of such excess TDS can be claimed by filing Return of Income for the relevant assessment year under the provisions of the Act.

TDS Certificates in prescribed forms would be issued to the shareholders through e-mails only. Hence, the e-mail IDs, PAN and other KYC details may be got updated with Registrar and Share Transfer Agents in case shares are held in physical mode and with Depository Participant in case shares are held in demat mode to ensure receipt of TDS certificate(s) in a timely manner. In case PAN is not registered /updated, TDS would be deducted at a higher rate even overall TDS received during the FY is less than the threshold limit of ₹5000/-.   i) Updation of PAN with Depository Participant. The shareholders are advised to update their PAN with the Depository Participant, if shares are held in DEMAT form.   ii) Updation of PAN with Registrar and Share Transfer Agent. The shareholders holding shares in physical mode are advised to update their PAN with the Registrar and Share Transfer Agent (RTA) of the Company. The address of RTA the Company is as under:   Alankit Assignments Ltd Alankit House, 4E/2, Jhandewalan Extension, New Delhi – 110055,
Telephone: 91-11- 4254 1234/ 1960, Fax: 91- 11-42541201/ 23552001,
E-mail: jksingla@alankit.com; rta@alankit.com   The amount of TDS deducted from dividend can also be viewed and checked by shareholders from Form 26AS and Annual Information System by logging on to the e-filing portal of the Income-tax Department at https://www.incometax.gov.in/iec/foportal/   Regards
Sd/-
(Rajni Kant)
Company Secretary

Disclaimer: This document does not purport to be an exhaustive document covering all the facets of TDS on dividend nor the same constitutes tax or legal advice. In view of the fact that, TDS/income-tax implication on dividend income in a particular case depends on specific facts of the case, each investor is advised to consult his/her tax advisors in this regard.