Rs 15/Share Dividend: HPCL To Pay 150% Dividends, Record Date Fixed: TDS For Indians, NRIs On Payout

After a dry year, oil marketing company, HPCL has finally come up with a hefty reward for its shareholders. The leading PSU will be paying to 150% dividend valued to Rs 15 per share. For the same, it fixed the record date. However, HPCL also announced the tax deducted at source (TDS) which will be applicable to these dividends.

As per the regulatory filing, HPCL's board of directors have proposed payment of an Interim dividend of Rs 15/- per equity share of face value of Rs 10/- each (150 % on the paid-up equity share capital) for the Financial Year 2023-24.

The OMC said, that members holding shares as of February 2, 2024, will be entitled to receive the dividend after deduction of applicable tax. This means that HPCL shares will turn ex-dividend on February 2nd as well. To be eligible for HPCL dividends, investors must have share prices of HPCL in their demat accounts by February 2, 2024.

But HPCL also said, that in order to avail exemptions/concessions from Tax, Shareholders are required to submit necessary documents and details.

Shareholders may note that pursuant to the changes in the Income Tax Act,1961 ('the Act') as amended by the Finance Act, 2020, dividend income will be taxable in the hands of the shareholders and the Company is required to deduct tax at source (TDS) at the time of making the payment of dividend to shareholders at the prescribed rates.

Tax deduction/withholding tax rate would vary depending on the residential status of the shareholder and the exemptions
as enumerated in the Act subject to fulfilling the documentary requirements, it said.

Here's how TDS residents and non-residents are liable to pay dividends:

Resident shareholders:

For Indian residents shareholders, the tax will be deducted at source ("TDS") under Section 194 of the Act @ 10% on the amount of dividend payable unless exempt under any of the provisions of the Act subject to fulfilment of the following conditions:

- Valid Permanent Account Number ("PAN") will be mandatorily required.

- Shareholders holding shares under multiple accounts under different statuses/ category (e.g., Resident and Non-Resident) and single PAN, may note that higher the tax as applicable to the status in which shares held under a PAN will be considered on their entire holding in different accounts.

- Non-linkage of PAN 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 Aadhaar, shall be required to link the PAN with Aadhaar. In case of failure to comply with 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. Meanwhile, for shareholders who are identified as "Specified Persons" under Sec 206AB of the Act, a higher tax rate as applicable would be deducted if:

- Shareholder has not filed the returns of income for the assessment year relevant to the previous year, immediately before the previous year for which the time limit for furnishing the return of income has expired, in which tax is required to be deducted/ collected.

- Aggregate of tax deducted at source and tax collected at source is rupees fifty thousand or more in the said previous year.

For TDS, the Company will verify the status (i.e., Specified Person or not and PANAadhar linkage) from the Government online facility and deduct TDS accordingly.

Resident Individuals:

Further, for resident shareholders (individuals), TDS would not apply if the aggregate of total dividend paid to them by the Company under folio(s) during FY 2023-24 does not exceed Rs 5,000.

Notably, tax will not be deducted at source in cases where a shareholder provides duly signed Form 15G (applicable to an individual below the age of 60 years) / Form 15H (applicable to an individual of the age of 60 years and above), provided that the eligibility conditions are met.

Valid PAN will be mandatorily required. However, if the PAN is not updated or is invalid or deleted or if Aadhaar is not linked or is classified as a Specified Person under Section 206AB then the higher rate as per the Act (i.e., 20%) would apply.

Non-Resident Shareholders:

To NRIs, a TDS of 20% (plus applicable surcharge and cess) is applicable on the amount of dividend payable.

HPCL Q3FY24:

The government-backed fuel producer reported revenue from operations of Rs 1,18,443 crore for the period Oct-Dec 2023. For the period Apr-Dec 2023, the Revenue from operations was Rs 3,40,105 crore.

Further, the company reported a record nine-month consolidated PAT of Rs 13,305 crore during Apr-Dec 2023 (Consolidated Net Loss of Rs 10,589 crore during the corresponding period of the previous year). The Standalone PAT during these nine months was also the highest ever at Rs 11,851 crore (Standalone Net Loss of Rs 12,197 crore during the corresponding period of the previous year). The Standalone PAT for the period Oct-Dec 2023 is Rs 529 crore (Net profit of Rs 172 crore during the corresponding period of the previous year).

HPCL said the same is lower than the previous quarter primarily due to suppressed marketing margins on select transport fuels and lower refining margins attributable to lower cracks & falling crude prices during the period.

Also, the company's average GRMs (Gross of export duty) for the period Oct-Dec 2023 were US$ 8.49 per barrel (US$ 9.14 per barrel during the corresponding period of the previous year). The Average GRMs (Gross of export duty) for the period Apr-Dec 2023 were US$ 9.84 per barrel (US$ 11.40 per barrel during the corresponding period of the previous year).

In their first cut, Swarnendu Bhushan - Co-Head of Research, Prabhudas Lilladher said, "HPCL reported lower than expected results with EBITDA/PAT of Rs21.6bn (-74%QoQ; PLe: Rs27.7bn) and Rs5.3bn (-90%QoQ; PLe: Rs9.7bn). Refining throughput at 5.3 mmt was down 7% QoQ (PLe:5.4 mmt). Marketing sales including exports improved 11% QoQ to 11.9 mmt."

Bhushan added, "As per our calculations, GRM came in at US$8.5/bbl (Q2: US$13.3/bbl; PLe: US$6/bbl). Gross marketing margin as per our calculations came in at Rs 2.8/litre below PLe of Rs3.8/litre. "

On the stock price, Bhushan said that the stock is currently trading at 1.2/1.1x FY25/26 P/BV. He gives a 'Sell' rating on HPCL stock price.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.