Grappling a shortfall in tax revenues, the government has pressed cash-rich PSUs like Indian Oil Corp (IOC) and Oil and Natural Gas Corp (ONGC) to pay a second interim dividend for the current fiscal after seeking regulatory nods. While IOC has called a board meeting on March 19 to consider paying a second interim dividend, ONGC has declined saying it does not have surplus cash to make such payments within a month of an interim dividend payout, sources with direct knowledge of the development said.
As per regulations, a company cannot declare a second dividend within a month of the previous payout and companies like ONGC would need to seek an approval of the market regulator SEBI to make such a payment. Sources said the government is struggling to meet the revised fiscal deficit target of 3.4 per cent in view of shortfall in Goods and Services Tax (GST) collections.
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GST shortfall is likely to be around Rs 30,000-40,000 crore and a similar shortfall is expected in direct tax collections as well, they said. In a regulatory filing, IOC said: “A board meeting of the company is scheduled on Tuesday, March 19, 2019…to consider declaration of 2nd interim dividend for the financial year 2018-19.” IOC had in December declared Rs 6.75 per share interim dividend alongside a Rs 4,435 crore share buyback to help the government meet its revenue targets.
