How NRIs Can Claim Their Dividends: A Simple Guide

Introduction:-

NRIs can claim their dividends in a few easy steps. First, they need to open a Non-Resident External Rupee Account with a Reserve Bank of India-approved bank. They will need to provide their passport, Resident Foreign Currency Account details, and proof of Indian address. Second, they need to submit a dividend application form to the bank, which can be done online. Finally, they need to provide their bank account details so that the bank can transfer the dividends.

What is an Unclaimed dividend?

According to the Ministry of Corporate Affairs, unclaimed dividends are those that have been paid out by a company but have not been taken or claimed by the shareholder. In order to address this issue, the MCA introduced Section 125 of the Companies Act, 2017, which deals with the declaration and payment of dividends.

Who is eligible to claim dividends?

In order to claim a dividend from an Indian company, you must first be a verified non-resident Indian (NRI). To do this, you will need to submit proof of your identity and current address to the company. Once you have been verified as an NRI, you will be able to claim your dividend.

However, there are some restrictions on how much you can claim. NRIs are only eligible to claim dividends on shares that they hold in an Indian company. This means that you cannot claim dividends on shares that you hold in a foreign company. Additionally, NRIs are only eligible to claim dividends on shares that they have held for at least six months.

If you meet all of the eligibility requirements, you can claim your dividend by submitting a dividend claim form to the company.

Foreign Subsidiary Compliances in India

How to claim dividend as an NRI?

Dividends are a type of income received by shareholders of a company from its profits. Dividends can be in the form of cash or shares. If you are a shareholder of a company, you may be eligible to receive dividends. As an NRI, you may wonder if you are able to claim these dividends.

The answer is yes, NRIs can claim dividends from Indian companies. However, there are some taxes that may be applicable. To claim your dividends, you will need to follow the steps below:

  1. Fill out a self-declaration form

2.Submit the form to the company

3.The company will withhold taxes on the dividend amount

4.You will receive the dividend amount after taxes have been withheld

Entry India

What are the taxes on dividends for NRIs?

From the financial year 2020-21 onwards, any dividend income received from shares of an Indian company by a shareholder qualifying as a ‘non-resident’ in India under the Income Tax Act shall be taxed at 20% plus applicable surcharge and 4% health & education cess, levied on the gross basis (maximum marginal rate of 28.5% i.e., 20% income tax plus 37% surcharge applicable if income exceeds ₹5 crore).

If you are a non-resident shareholder, you will not be eligible for the ₹2.5 lakh slab benefit for dividend income. If you are a shareholder who qualifies as a resident in India under the Income Tax Act, your dividend income will be taxable at the applicable slab rates. Only resident shareholders can submit the forms for non-deduction of tax at source on dividend income.

However, theDouble Taxation Avoidance Agreement (DTAA) between India and the relevant host country may tax such dividend at a special rate. To apply for the beneficial rate under DTAA, you must qualify as a ‘resident’ of the host country under the DTAA and obtain a tax residency certificate from the host country tax authorities. You will need to furnish Form 10F, along with the tax residency certificate, to the Indian dividend paying company.

If you are a shareholder who is not a resident of India, the Indian company will withhold tax on your dividends at a rate of 20% plus any applicable surcharges and 4% health & education cess. If you wish to claim the beneficial rate under the DTAA between India and your host country, you must inform the Indian company and provide the necessary declarations.

As a ‘non-resident,’ the entire dividend income will be taxable at the rate of 20% plus any applicable surcharge and health & education cess. To claim a beneficial rate under the DTAA, you will need to obtain a tax residency certificate from the host country tax authorities, complete Form 10F, and provide the necessary declarations to the Indian dividend-paying company.

Conclusion

NRIs can claim their dividends by following a few simple steps. First, they need to open a Non-Resident External Rupee Account with a Reserve Bank of India-approved bank. Second, they need to submit a dividend application form to the bank, which can be done online. Finally, they need to provide their bank account details so that the bank can transfer the dividends. By following these steps, NRIs can easily claim their dividends