Tanisha Singh wants to know if paying tax on dividend as well as maturity amounts to double taxation or not
06-Jan-2009 •Research Desk
I would like to understand if one pays tax on dividend as well as on maturity would it not amount to double taxation? Once the tax is paid when the dividend is declared and the other when you actually redeem your investment. I always understood that the tax liability will be once. Kindly clarify the same.
- Tanisha Singh
No, it would not be a case of double taxation. As in case of Dividend Re-investment option after paying the Dividend Distribution Tax (DDT), the left over money which gets reinvested in the fund is like a fresh investment. And as and when the fund is redeemed depending upon the holding period (Long term /short term) investor is liable to pay tax on the gains accrued on the reinvested amount.