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Taxability on devidend distributed by mutual funds

ADITYA (Manager Finance) (742 Points)

26 July 2016

Is devidends distributed by Mutual Fund are Taxable ? Please answer for Equity and Debt Funds

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suresh (proprietor) (425 Points)
Replied 26 July 2016

The dividend received in hands of unit holder for an equity mutual fund is completely tax free. The dividend is also tax free to the mutual fund house. This means, the fund house is also not liable to pay any tax on the dividend received. Thus for equity mutual fund, dividend is tax free for both—unit holder and fund house.

The dividend income received by a unit holder on his debt mutual fund is also tax free. But, the mutual fund company has to pay a dividend distribution tax (DDT) before distributing this income to its investors.