In this article we will elaborately discuss about how the tax on dividends earned from mutual funds, often referred as DDT (Dividend Distribution Tax) are charged. One must be aware that, there is no action that need to be taken from the investor's side as these dividends are already tax deducted before being credited to the investor's bank accounts.
Debt Mutual Funds offer steady income and are generally a low risk mutual fund schemes. Debt Mutual Funds mainly invest in a mix of debt or fixed income securities such as Treasury Bills, Government Securities, Corporate Bonds, Money Market instruments and other debt securities of different time horizons. Generally, debt securities have a fixed maturity date & pay a fixed rate of interest.
Many mutual fund investors have questions about how the income obtained from Mutual Funds are taxed. Well, the fact is the taxation varies for various mutual fund schemes. This article targets the budding investors and tries to explain the tax rates applicable on fund returns for equity and debt mutual fund schemes in simple terms.