Budget 2016 has introduced a 10 per cent tax on dividend income of over ₹10 lakh in a year. Apparently, this dividend refers to the dividend declared by companies for their shareholders. Is the dividend declared by mutual funds which is paid out or reinvested by the fund houses also covered in this new rule? Or is it exempted?
- Ashwani Goyal
The new budget proposal is not applicable to dividends declared by mutual funds.
This rule will apply on dividend income received from companies above ₹10 lakh per year. It is applicable to individuals, Hindu Undivided Families (HUFs) and firms. These entities will have to pay 10 per cent tax on the gross amount of dividend.