Ask Value Research

Is dividend payout taxable?

Dividends from equity and debt mutual funds are tax-free for mutual fund investors

Is dividend payout taxable? If yes, what is the rate of tax? Will the Asset Management Company (AMC) deduct the tax amount and pay the rest to investors?
- Seshadri Padmanabhan

Dividends from equity and debt mutual funds are tax-free for mutual fund investors. However, mutual funds pay a dividend distribution tax (DDT) of 28.84 per cent on dividends declared in debt mutual funds. They deduct this amount and pay out the rest of the money to investors. Funds don't pay any DDT on dividends declared in equity oriented mutual funds.

This article was originally published on February 01, 2016.

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