Dividend Distribution Tax on Mutual Funds from FY 2020

Dividend Distribution Tax on Mutual Funds from FY 2020

Dividend Distribution Tax (DDT) from Financial Year 2020 onward, will be charged at the investor level as per the new Income Tax laws. This is applicable for the investors who benefit from Dividend yields from shares and mutual funds.

  1. To whom the Dividend Distribution Tax (DDT) is applicable?

    DDT is applicable for the investors who benefit from Dividend yields from Shares and Mutual Funds.

  2. Who pays the Dividend Distribution Tax (DDT)? Is it Investor or the Company / AMC ?

    As per the new Income Tax law starting Financial Year 2020, Dividend Distribution Tax (DDT) has to be paid by the investor according to their respective tax bracket.
    In addition to this, if the dividend yield is above Rs.5000, then 10% tax will be deducted at the source.

  3. What is the new Income tax bracket / Income tax slab from FY 2020?

    The new Income tab bracket / Income tax slab from For FY 2020 is tabulated below.

Income Range Tax (%)
Below INR 5 LakhsNIL (No Tax)
INR 5.0 to 7.5 Lakhs10%
INR 7.5 to 10 Lakhs15%
INR 10 to 12.5 Lakhs20%
INR 12.5 to 15 Lakhs25%
Above INR 15 Lakhs30%
4. Will there be additional TDS applied by the AMCs on the gains from equity mutual funds with effect from DDT?

No, AMCs/ Fund Houses cannot charge TDS on the capital gains. They can only deduct tax on dividend if the yield is above Rs.5000.

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