Are you an investor in public sector undertakings or want to buy shares of PSUs hoping to reap good dividends? Well, the Budget this year has some good news in store for you. The government has not only revised its dividend estimates for the current financial year upwards, it has set even more ambitious targets for next year.
In the current financial year ending March 2025, the Budget has estimated dividends of Rs 55,000 crore from state-owned companies. For the next 2025-26 financial year, it is expecting an even higher dividend of Rs 69,000 crore.
Several PSUs have been strong dividend payers in the past and that has made them attractive for retail shareholders. For the government too, a high dividend from PSUs has been essential given the heavy lifting it has been doing in the last few years towards increased capital spending. Add to it, in the Budget this year, the finance minister announced sizeable income tax relief for the country's middle class in a bid to boost consumption.
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Not only has it proposed nil tax on income up to Rs 12 lakh a year, tax slabs were also revised. So, now under the new regime, only those earning income above Rs 24 lakh will be paying 30 per cent income tax, compared with those earning income of over Rs 15 lakh earlier.
As a result of the tax proposals, revenue of about Rs 1 lakh crore in direct taxes and Rs 2,600 in indirect taxes will be foregone, Finance Minister Nirmala Sitharaman said on Saturday.
In this backdrop, higher dividends will certainly help.
The Finance Ministry had in November 2024 revised norms for dividend payments. All public sector units, except for state-owned banks and insurance companies, have to pay a dividend of 30 per cent of profit or 4 per cent of net worth, whichever is higher as per guidelines that were released by DIPAM (Department of Investment and Public Asset Management). The new guidelines are to be applicable from the current financial year.
