Cos rush with interim dividends

chennai: in taxing times, it pays tobe investor friendly (read: promoter friendly). in the aftermath of the budget,the cream of corporate india was quick to announce that their boards willconsider interim dividend payouts. it is unusual for companies to announceinterim dividends in march. however, with yashwant sinha announcing thatdividends would get taxed in the hands of shareholders with effect from nextfiscal, promoter-driven companies have lost no time in announcing interimdividends in order to save on taxes. a host of companies—reliance petro,raymond, dr reddy’s labs, hero honda, dabur, kotak mahindra, cipla, geshipping, and so on— announced on friday that their boards would meetduring the first week of march to consider an interim payout. the logic: ifannounced before april, the rate of tax is only 10 per cent. in the next fiscal,this would vary depending on the tax bracket of the recipient. of course, everypromoter of cash-rich corporates falls into the topmost bracket of 30 per cent.an interim dividend announced before march 31 would not attract the new taxnorms even if it is paid out during the next fiscal. typically, a company needs42 days to pay the declared interim dividend. this payout also doesn’trequire shareholder approval in advance. a company secretary of one of thecompanies issuing an interim dividend in the near future says that it may notdeclare any final dividend at all. "i would say we are promoter friendly as thestake of the promoters is over 51 per cent and the tax on this payout would beborne by the company and not by the promoter."