Interest and Dividend information reporting in case of Custodial Accounts- Rule 114G(1)(e) of the Income Tax Rules, 1962
Summary
This circular mandates the reporting of interest and dividend information for reportable custodial accounts under Rule 114G(1)(e) of the Income Tax Rules. It requires Depositories to provide additional data fields by July 15, 2017, enabling Depository Participants to report entitlements rather than actual payments. The directive applies to Recognized Depositories, DPs, and RTAs to ensure compliance with tax reporting obligations.
Text
In terms of Rule 114G(1)(e)(i) of Income Tax Rules, 1962 issued under Section 285BA of Income Tax Act, 1961 following information is required to be reported by reporting financial institution in the case of reportable custodial account: (i) the total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year;
Depositories shall provide additional field in the depository system to the RTAs by July 15, 2017 whereby the RTAs can incorporate the details of corporate action viz. dividend/interest in rupee terms per unit of the security at the time of setting up of corporate action. Depositories shall make available such information to DPs to enable them to do necessary reporting.
The reporting with respect to dividend / interest is to be done by DPs on ‘entitlement’ basis and not on the basis of actual payment received by the demat account holder.
If a demat account is identified as a ‘reportable account’ during a calendar year by the DP, the reporting under Rule 114G (1) (e) is to be done for the dividend / interest entitlements during the entire calendar year i.e. including the period of the calendar year before identification of such account as a ‘reportable account’ by the DP.
You are advised to take necessary steps to ensure compliance with the above.
The Depositories are directed to bring the contents of this circular to the notice of the Depository Participants, Registrar to an Issue and transfer agents/Issuers of the securities and also disseminate the same on their websites.
This Circular is being issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Rule 114G(11)(a) of the Income Tax Rules, 1962.
Source: SecMarx — Interest and Dividend information reporting in case of Custodial Accounts- Rule 114G(1)(e) of the Income Tax Rules, 1962. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.