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Economy

Tracking The Truckload of Interim Dividends in March to avoid the Dividend Tax in April

Over the last few days, there has been a wave of Corporate Actions (Board Meetings) as every company rushes in to consider payment of dividends. Why? 

During the Budget 2016, the Finance Minister Arun Jaitley outsmarted the best of corporate world with the Introduction of Dividend Distribution TaxHere is a short post on this along with the other Budget 2016 articles

Basically, anyone getting more than Rs. 10 lakh in dividends from April 2016 has to pay 10% of those dividends as tax. That doesn’t apply till then. 

But in the process, the Finance Minister Arun Jaitley has unknowingly provided the corporate world a honeymoon period of 32 days (since the announcement of budget on the 29-Feb until the 1-April when the rule would be in effect) wherein they can move ahead the future planned dividends to be declared.

Why does it matter? Look back at the holdings of Promoters and Big Individuals who would want to take the cash now rather than after April. These category of investors are the ones generally who take home a lion’s share of the dividend and they do not like to share this extra topping with the government. (Do note that this Dividend Distribution Tax is only levied on Individuals and HUF earning more than Rs.10 lakhs in dividends and not on firms or corporate entities).

So we have decided to create a Dividend Tracker that we update at the end of every day so as to capture two sets of information:

  1. Dividend of the past: List of all companies that have declared dividends (both Interim and Final) along with the amount of dividend and the Ex-Dividend date so as to keep a tab on the eligibility of the dividend. Remember not investor gets the dividend.(explained below)
  2. Dividend of the future: For a company to consider taking advantage of this honeymoon period for dividend payment, they need to hold a Board Meeting. This is a very good indicator which shows the list of companies getting this arsenal ready to pay dividends.

You can visit the Dividend Tracker page who keep a lookout for your invested companies declaring dividends. Hope you find this tracker useful. Do share your comments and views. If you also like us to track any additional details, do let us know and we will make our best effort to incorporate them.

Not all investors get dividends. Why?

An investor is eligible to receive dividends only if the investor holds the share on the Record Date. Record date is the date on which the company issuing dividends records the names of all investors holding its share. An investor is not eligible to receive dividends in his invested stock if he buys the stock on or after the Ex-Dividend Date. 

We’ve posted the date of the meetings and the Ex-Date on the tracker, and we’ll update it by the end of the day. 

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Disclaimer

Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion. 

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