India's No.1 ISO Certified Premium Startup Consulting Company

CBDT Clarifies TDS on Mutual Fund Dividend

CBDT Clarifies TDS on Mutual Fund Dividend

CBDT Circular Clarifies

According to the new Budget 2020 proposals, clarification made by the Central Board of Direct Taxes CBDT, Mutual funds or companies shall impose TDS (TAX Deducted at source) to be deducted at the rate 10% (Ten Percent) only on Dividend outflows which are paid to the shareholders if the amount of dividend proceeds is more than Rs/-5000 per year and not on capital Gain.

The Finance Bill, 2020, has inserted a new section 194K in the Income Tax Act, which states that "any person responsible for paying income arising from units of mutual fund or a company must deduct tax at the rate of 10% (Ten percent) of such income".


TDS on Mutual Fund Dividend

And Budget 2020, Also clarified by our Hon’ble Finance Minister Nirmala Sitharaman, Scraping the DDT (Dividend Distribution Tax) which was taxable in the hands of the Company and Mutual funds and introduces the TDS/ Tax deducted at source (taxes to be paid by the investors or shareholders).

Queries were raised regarding that whether companies or mutual fund will deduct TDS (Tax deducted at source) arising on redemption of units which is the income in the nature of capital gains, In a statement clarified by the CBDT under proposed section 194(k), that mutual funds or companies shall deduct TDS at ten percent only on the dividend income and no TAX will be deducted on the capital gain income.


Neusource Startup Minds is one of the Best Business management consultant, Offering various services like Proprietorship Firm Registration, OPC Registration, LLP Registration. Neusource Startup Minds provides a wealth of proficiency and best practices in tax administration and process expansion for effectively managing GST compliance Process, Compliance Package for Pvt Ltd Company, OPC Compliances Packages.

22 Feb

Shivani Gupta
Shivani Gupta

“Starting Any Business Is A Formidable Journey Of A Lifetime!” NEUSOURCE ‘The Leader of Business registration’ clears the way for success in the present era by helping new startups. LET's GET STARTED!!