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Life Insurance Corporation of India (LIC) offers a variety of services. Customers should be updated from time to time about the new rules related to these services. Recently LIC issued an important alert to shareholders. Stakeholders are requested to update PAN Numbers (PAN), and bank details immediately. Otherwise, you will have to pay more Tax Deducted at Source (TDS) on the shares. LIC has issued a notification on 5th July 2024 regarding this matter.
 

* Dividend details

Life Insurance Corporation of India (LIC) has declared a final dividend of Rs 6 per share for the financial year 2023-24. The dividend amount is Rs.6 equity share price and Rs.10 face value. But this price has to be approved by the shareholders in the third annual general meeting. This meeting will be held on August 22, 2024. Shareholders holding LIC shares as on July 19, 2024 are entitled to dividends. Payment of these will be made within 30 days from the date of declaration of dividend or, at the latest, by 20 September 2024. Those who update their bank account details with the Depository Participant (DP) receive payment through various online and other acceptable methods.
 

* TDS on dividend income

As per the Income Tax Act (IT Act), TDS has to be deducted from dividends paid to shareholders by an LIC company. These dividends are part of the income of the shareholders. Tax has to be paid on these. As per TDS norms, LIC shareholders need to update their residential status, PAN number, and other details with Depository Participants (DP). Those who have not updated their bank account details should update them with the Depository Participant by 5:00 PM on Friday, July 19, 2024. With this, the dividends are directly deposited in the bank account.
 

According to the IT Act, individual shareholders (residents of India) are exempted from TDS if the total dividend in a financial year (2024-25) is less than Rs.5,000. If PAN number is unregistered or invalid, TDS will be deducted at a higher rate than the normal rate or at a 20% rate. Details of TDS paid can be found in the downloadable form 26AS from the IT e-filing website.

* Deductions

For the financial year 2024-25, TDS will be deducted under Section 194 of the IT Act.
 

Section 194

The applicable rate for members with valid PAN is 10%, or the government of India will notify them of the rate. Exemption/documentation is non-existent. This requires updating the valid PAN if not already done with the respective depositories.

Section 206AA
This section applies to members with no or invalid PAN number. It is also applicable to members specified as specified persons under section 206AB of the IT Act. The rate of TDS payable by them is 20%. The valid PAN number should be updated with the depository. According to the IT Act (Section 139AA), if the PAN number is available and the Aadhaar card is eligible, the two should be linked. If this linking is not done, the PAN number will be invalid.