Know what has been decided about the proposal of 10% TDS
CBDT issued a clarification on the decisions made in the budget for those who invest in mutual funds, saying that the proposal of 10% TDS in the budget will only apply to the dividend paid by the mutual fund.
- Last Updated:
February 5, 2020, 9:48 AM IST
- Edited by: Puja menon
what will happen now- Suppose if you If mutual fund scheme (Mutual Funds Scheme) provides dividend, then TDS will have to be paid on dividend at the rate of 10% under 194K. This means that only selected schemes will be taxed. At the same time, whenever you withdraw money from your scheme (except dividend scheme), according to the new proposal, TDS will not be deducted.
Experts say that investors are advised to invest in Dividend Scheme, who do not want to take too much risk and want some income. Investors who want to build big assets in the long term through SIP, should opt for the growth scheme. The reason for this is that the benefit of compounding does not get due to getting dividend.Read this too – you have also taken LIC policy, then know what will be the effect of this decision of the government
What are the dividend paying schemes? Experts say that dividends are not available in all schemes of mutual funds. Dividend is declared in his scheme when he makes a big profit from his portfolio. The fund manager who runs the scheme buys and sells the shares, which makes a profit. In the case of debt funds, the portfolio gets interest or dividend on investment in bonds. The fund manager can distribute such amount to investors as dividend.
The scheme of a mutual fund can declare a dividend every day, every month, every quarter or once a year. It also depends on the category of the scheme. Suppose many hybrid plans or monthly income plans try to give a dividend every month to the unitholders.
However, getting a dividend is not sure and it is not even sure how much amount will be received as a dividend. Net asset value (NAV) is not allowed to increase in dividend scheme. Whenever the NAV reaches a certain level, the asset management company declares the dividend.
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First published: February 5, 2020, 9:37 AM IST
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