Tata Consultancy Services, one the world’s top ten software services companies by way of

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revenues, is bringing back profits from its scores of overseas subsidiaries to India, taking advantage of a one-year tax provision in India that allows repatriation of these retained earnings at half the normal corporate income tax rate.

The record depreciation of the rupee against the greenback, which has made the domestic currency amongst the worst performers amongst Asian currencies this year has proven an added incentive for bringing back accumulated profits at its 54 overseas subsidiaries (as of end March 2011).

“We have brought back around Rs 1,500 crore so far this year as dividends from our overseas arms taking advantage of the 15 per cent concessional tax rate this assessment year. Also we wanted to use the cash for some purposes,” S Mahalingam, chief financial officer of Tata Consultancy Services, told Financial Chronicle.

On Tuesday, the company said its board of directors declared a third interim dividend of 300 per cent on its Rs one face value equity shares. In 2010-11, TCS paid a total dividend of Rs 2,740.1 crore on its equity shares outstanding.

Dividend from TCS is one of the major sources of income for Tata Sons that holds 73.75 per cent of the NSE-listed company.

“A number of companies such as TCS that historically had profit making subsidiaries around the world held through holding structures did not bring back the money to India unless they desperately needed it, because it would be subjected to the rate of corporate income tax (30 per cent) plus cess which in aggregate was a substantial amount. For firms like TCS that have not borrowed large sums of money to invest in overseas subsidiaries and hence do not have interest expenses to set off against this income, the concessional tax rate this year is beneficial,” said Gokul Chaudhri, leader direct tax practise at BMR Advisors.

“The repatriation of dividends is the primary reason that the net other income in our standalone financial results for the quarter ending December 2011 rose to Rs 763.84 crore as compared to Rs 137.19 crore in the year ago period,” said Mahalingam.

TCS has two sets of subsidiaries those in which it holds stakes directly and others in which it holds stake via other subsidiaries. In the quarter ended December 2011, while it liquidated Tata Consultancy Services Morocco SARL AU due to lack of business, it set up a wholly-owned subsidiary Tata Consultancy Services Qatar SSC to implement projects in the gas rich state.

On an overall basis, TCS has been seeing its consolidated tax rate trend up as the benefit of operations in the software technology parks of India scheme fades. For the quarter ended December 2011, its tax outgo rose to Rs 930.81 crore from Rs 504.14 crore in the year ago period.