Infosys, the Indian multinational corporation that provides business consulting, information technology, and outsourcing services, has announced an interim dividend of Rs 18 per equity share.
Infosys has fixed October 25, 2023, as the record date for the interim dividend and November 6, 2023, as the payout date.
Infosys reported a better-than-expected three percent year-on-year (YoY) growth in consolidated net profit to Rs 6,212 crore for the second quarter of FY24.
The consolidated revenue of the company rose nearly 7% YoY to Rs 38,994 crore. In constant currency terms, the company’s revenue grew 2.3% sequentially and 2.5% on a YoY basis.
The dividend payout is a positive development for Infosys and its investors, reflecting the company’s strong financial performance and commitment to shareholder value.
What is the significance of the Infosys dividend for shareholders?
- Reward for investment: Dividends are a way for companies to reward their shareholders for investing in their business.
- Steady income stream: Dividends provide a steady income stream for shareholders, which can be especially important for those who rely on their investments for income.
- Positive signal: A company’s decision to pay dividends can be seen as a positive signal to investors, indicating that the company is financially stable and has confidence in its future prospects.
- History of dividend payouts: Infosys has a history of consistently declaring dividends for the last 5 years, which can be seen as a positive sign for investors.
How will Infosy’s dividend affect the company’s stock market performance?
- Positive signal: This positive signal can lead to an increase in demand for the company’s stock, which can drive up the stock price.
- Attracting investors: Dividend-paying companies are often attractive to investors who are looking for a steady income stream. This can lead to an increase in demand for the company’s stock, which can drive up the stock price.
- Dividend yield: The dividend yield is the ratio of the annual dividend payout to the current stock price. A higher dividend yield can make a company’s stock more attractive to investors, which can drive up the stock price.
- Market conditions: The stock market is influenced by a variety of factors, including economic conditions, industry trends, and geopolitical events. These factors can impact the stock price of Infosys and other companies in the industry, regardless of their dividend payout.
while there is no guarantee that Infosys’ dividend payout will lead to an increase in the company’s stock price. The dividend yield can also make a company’s stock more attractive to investors. However, market conditions can impact the stock price of Infosys and other companies in the industry, regardless of their dividend payout.
What are the tax implications of Infosys dividend for shareholders?
- Taxable income: As per the Indian Income Tax Act, 1961, dividend paid and distributed by a company is taxable in the hands of shareholders. Therefore, the dividend income received by shareholders is subject to tax.
- Tax deduction at source (TDS): Infosys is required to deduct taxes at source on the dividend payable to shareholders as per the applicable provisions under the Income Tax Act, 1961. The company has notified the record date for the purpose of the final dividend for the financial year 2022-23 as June 2, 2023, to the stock exchanges. Shareholders who remain on the record date and whose dividend receivable exceeds the amount exempt from tax will have TDS deducted from their dividend income.
- Withholding tax rates: The withholding tax rates for resident shareholders with a valid Permanent Account Number (PAN) are 7.5%, and for non-resident shareholders, the rates prescribed under the Income-tax Act, 1961, or Tax Treaty, read with Multilateral Instruments, if applicable.
- Exemption from TDS: No withholding of tax is applicable if the dividend payable to resident individual shareholders (having valid PAN) is up to Rs. 5,000 p.a. within a Financial Year.
- Documents required: Shareholders are required to submit certain documents to Infosys to verify their eligibility for exemption from TDS. The list of documents to be provided by each type of shareholder is available on the shareholder portal.
The dividend income received by shareholders is subject to tax, and Infosys is required to deduct taxes at source on the dividend payable to shareholders. Shareholders should also be aware of the withholding tax rates and the exemption from TDS.