Ajustment of TDS on LIQUID BEES DIVIDEND for units pledged

@nithin

As it was proposed to levy tax deducted at source ( TDS) of 10 per cent on dividend/income paid by a company or mutual fund to its share/unit holder if the amount of such dividend/income exceeds Rs 5,000 in a year.

I understand that Zerodha will be continuing with the current procedure for crediting the dividend units to the respective unit holder who has pledged Liquid bees for margin. Since the introduction of TDS on dividend is introduced and the MF is going to credit the TDS in your PAN. How is Zerodha planning to credit that to the actual owner and when?

Wish Nippon India consider converting LIQUID BEES to a growth plan.

Currently, the way clients can avail margins in the F&O segment is by physically transferring shares from their own account to the account of the broker and then it gets pledged to the Clearing Corporation.

Effective June 01, 2020, this process is undergoing a change. The shares will no longer move out of the investor’s demat. Instead, a pledge will be marked in favor of the trading member. Here’s the SEBI circular explaining the change. With the units being in the investor’s account, the dividend will get credited directly to the investor’s demat, and so the TDS will be filed against the investor’s PAN.

As far as the next 2 months are concerned, we’ve raised this concern with the AMCs, will revert to you how this can be handled.

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The AMC is going to deduct a 10% TDS and then payout the dividend to us since the units are lying in the broker’s account. The TDS will be filed against our PAN.

We will inturn give credit of the dividend received in the form of units to our customers and then file the TDS credit against the customer’s PAN on a quarterly basis. TDS credit to the extent of 10% will reflect in the 26AS of the assessee to whom the liquid bees units are credited

This is only till the new pledge process comes into effect, after which the stocks continue to remain in the client’s account and the client is direct beneficiary of the dividend.

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Could you please explain how the new SEBI rule on pledging affect existing pledged liquid funds? Further can more funds be pledged as a result of this change? Is there a dedicated page/thread to discuss this?

It isn’t limited to just liquid fund but to all stocks that are pledged to obtain margins to trade in the F&O segment. I’ve written about it in my previous post with the SEBI link which you can refer.

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is there any way i can know that how much TDS they have deducted on dividends belonging to me as they will deduct TDS on whole dividend credit given to u??. This will help in matching tax credit in form 26AS. There comes frequent problem of TDS mismatch. SO without knowing how much TDS was deducted for me in whole , it would be hard to get a correct figure for tax credit in form 26AS. All the scenario i m asking about pledged stocks or liquidbess

Do we as a stock broker have to deduct the tds on reimbursement of Dividend to our clients u/s 194 on which shares we received the dividend for client’s shares pooled in broker account?

Any timeline for crediting TDS to our accounts. Haven’t rec’d any credit for the first and the second quarter yet.

@siva
When can we expect the 1st and 2nd Quarter tds credits to our tds accounts??

@Nakul Can you.

Q1 and Q2 TDS have already been filed in respect of TDS filed by Companies in our name. DM me your client ID and I’ll check.

When can we expect the TDS Credit for the quarters Q1 AND Q2. I dont find any TDS credit in our 26as statement for fy 2020-2021.

By mid May 2021, you’ll see the credit reflecting.

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