As per clause (b) of the first proviso to section 194 of the Income-tax Act,
“no deduction shall be made in the case of a shareholder, being an individual, where-the amount of such dividend or, as the case may be, the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, does not exceed Rs. 5000/- (five thousand rupees)”.
Therefore, the above provisions obligates the payer to withhold taxes in all cases where the amount of dividend likely to be paid during the relevant financial year exceeds Rs.5,000/-. NTPC has the history of paying interim dividend and final dividend and it is expected that NTPC would pay an interim dividend during the current year i.e. financial year 2020-21. Accordingly taxes has been withheld @7.5% on the final dividend for financial year 2019-20 with a threshold limit of Rs 4,600/-.
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