Is it advisable to switch from the dividend option of any fund to the growth option due to the DTC in which the dividends will be taxed as well as stopping the current dividend plan and then start a new SIP on the respective growth fund?
- Sivadas
Yes. It will be a better option to consider shifting from the dividend option to growth option when DTC comes into effect. It is not the 5 per cent tax on dividends that will impact your returns, the fact that in recent times SEBI has directed all mutual funds to calculate dividends from realized gains and not on pre-defined times each year will also reduce the dividend that is paid out.
You can stop your existing SIPs in the dividend option and initiate fresh SIPs in the growth option.
This article was originally published on April 12, 2011.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
