The additional 10% tax on dividend income announced in the Budget would not pinch many wealthy promoter groups after all. Promoters of several blue chips hold only a small stake in their individual capacity, through HUFs (Hindu undivided families) and partnership firms controlled by them, which come under the new tax.
For instance, 17.39% of promoter stake in IT major Wipro is owned by the Azim Premji trust. The company has paid a dividend of Rs 12 per share so far in 2015-16, earning the trust about Rs 516 corer in dividend income.
Trusts and holding companies would not attract the proposed additional tax on dividend, experts said. If Wipro maintains the payout at the same level in 2016-17, the dividend that the trust receives would still remain tax-free.
Similarly , about 43% of promoter holding in Adani Ports and Special Economic Zone is also held in a family trust. An employee welfare fund and trusts own 14.17% in automobiles major Mahindra & Mahindra (M&M).This is more than half of the promoter holding in M&M.