Income tax on dividend on mutual funds

1) If 65% or more of the corpus of a mutual fund scheme is invested in equities, it is treated as equity scheme for the purpose of taxation

2) If you redeem your equity fund investments within a year, returns or gains are treated as short-term capital gains and taxed at 15%.

3) On the other hand, gains on equity mutual funds held for more than a year are treated as long-term capital gains. And you have to pay a 10% tax on gains exceeding ₹ 1 lakh a year on equity investments.

4) Also if you had invested equity mutual funds or shares before 31 January 2018, gains till that date will be considered as grandfathered and  will be exempt from tax

5. Dividends from equity mutual funds are tax-free in the hands of investors. But dividends from equity mutual funds are paid after deducting a dividend distribution tax (DDT) of 11.648% (including surcharge and cess), which reduces the in-hand return for investors.

6) Arbitrage mutual funds, which invest in arbitrage opportunities in cash and derivative segments of the equity markets, are treated as equity funds for the purpose of taxation.

7) For income tax purposes, international funds (which invest in stocks abroad) and fund of funds (a mutual fund scheme that invest in different mutual funds) are considered as debt funds. Tax rules that apply to debt funds are also applied to gains or returns from international funds and fund of funds.

8) In case of debt funds or non-equity funds if you sell your investments after less than three years of holding, gains or returns are treated as short-term capital gains for taxation purpose. Short-term capital gains are added to your income and taxed according to your applicable income tax slab.

9) If the holding period of debt fund investments is more than three years, returns are considered as long-term capital gains for taxation purpose and taxed at 20% with indexation benefit. Indexation means adjustment of gains after taking inflation into consideration. So if you have invested in a debt fund for over three years, you will be paying taxes only on the returns over and above the inflation-adjusted initial investment.

10) Dividends from debt mutual funds are tax free in the hands of the investor but dividend payouts from debt mutual funds are subjected to a dividend distribution tax of 29.12% (including cess and surcharge). This effectively reduces the in-hand return for investors.

1. According to sec 10(35), dividend received from an MF will be exempted from payment of tax. 
2. There is no limit as such specified u/s 10(35) unlike in sec 10(34) where the limit is Rs. 10 lakhs. But to contrary, there has not been any mention of MF dividend from the exclusion sec 115BBDA. But from a plain reading of sec 10(34) and sec 10(35), sec 115BBDA will only apply to dividend referred to in sec 10(34).  
3. Hence whatever the amount received as dividend from MF will not be subject to tax and there is no limit with respect to the same. 
Please correct me if the above solution has an alternative view.