RIL declares interim dividend

Total payout towards the dividend would be Rs 3,402 cr and dividend payout to promoters would be Rs 1,547 cr

Reliance Industries (RIL) declared an interim dividend of Rs 10.50 per fully paid-up equity share of Rs 10 each. Total payout to shareholders would be Rs 3,402 crore and to the promoters would be Rs 1,548 crore. RIL has fixed March 18 as the record date.

MONEY MATTERS

• 98 companies have declared interim dividend of Rs 27,281 crore after the Union Budget imposed a 10% additional dividend tax on three categories of shareholders with dividend income of Rs 10 lakh or more a year  
• Promoters shareholding as individual, HUF or firm (including LLP) will be liable for the new tax; promoters’ holding through companies or trusts will be exempt

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This Union Budget, the finance minister introduced a 10 per cent additional tax on individuals, Hindu Undivided Families and companies (including limited liability partnerships or LLPs) with dividend income of over Rs 10 lakh for the year starting April 1. This will be in addition to the 20.47 per cent tax that Indian companies pay as dividend distribution tax.

Declaration and payment of dividend before end-March is thus a one-time opportunity for companies and individual promoters to mitigate the additional 10 per cent tax liability.

The promoters holding in RIL is 45.2 per cent. Institutions and non-institutions held 31.96 per cent and 19.71 per cent, respectively. High promoter holding accrues significant earnings through dividend payments.

Of the Rs 1,548 crore dividend the RIL promoters will get, Rs 1,272 crore will come to them in their capacity as individuals and LLPs, which becomes liable for the new dividend tax next financial year. This interim dividend payout before April 1 would result in a tax saving to the tune of Rs 127 crore for the Ambanis.

The bulk of the promoter holding in RIL is routed through LLPs. The dividend income of these would be taxable under the new rule.

In all, Reliance Industries paid equity dividend of a little less than Rs 3,000 crore in FY15, of which around Rs 1,100 crore accrued to various promoters' LLPs.