Form 26AS -- TDS on mutual fund dividends in India

Form 26AS is an annual consolidated tax credit statement maintained by the Income Tax Department of India for each PAN holder, showing all Tax Deducted at Source (TDS), Tax Collected at Source (TCS), advance tax payments, and self-assessment tax payments credited against the taxpayer’s account. For mutual fund investors, Form 26AS is relevant primarily because it records TDS deducted by AMCs under Section 194K on Income Distribution cum Capital Withdrawal (IDCW) payouts when the cumulative IDCW paid by a single AMC to an investor exceeds Rs 5,000 in a financial year.

Form 26AS is now substantially superseded for comprehensive tax information by the Annual Information Statement (AIS), but it remains the definitive TDS credit record and is used to claim TDS credit in income-tax returns.

Section 194K – TDS on mutual fund IDCW

Section 194K was inserted into the Income Tax Act, 1961 by the Finance Act 2020, effective 1 April 2020. It requires the person responsible for paying income in respect of:

• Units of a mutual fund (dividends / IDCW)
• Units from the administrator of a specified undertaking
• Units from a specified company

…to deduct TDS at 10% before making payment, provided the amount paid or payable during the financial year to the same investor from the same fund house exceeds Rs 5,000.

Before Section 194K, dividends from equity-oriented mutual funds were exempt from TDS, and dividends from debt funds attracted Dividend Distribution Tax (DDT) at the fund level, not TDS at the investor level. The DDT regime was abolished with effect from FY 2020-21 and replaced with investor-level IDCW taxation, making Section 194K operational.

How TDS on IDCW works in practice

1. An investor holds units in an IDCW (dividend) option of a mutual fund scheme.
2. The AMC declares an IDCW payout.
3. The AMC computes the cumulative IDCW paid to each investor in the financial year.
4. If the cumulative IDCW from that AMC to that investor exceeds Rs 5,000, the AMC deducts 10% TDS on the payout (or the excess above Rs 5,000, depending on whether the threshold has just been crossed).
5. The TDS is deposited with the Income Tax Department against the investor’s PAN.
6. The AMC files TDS returns (Form 26Q) showing the investor’s PAN, the amount of TDS, and the payment date.
7. The TDS appears in the investor’s Form 26AS under Part A (TDS from sources other than salary).

TDS for NRI investors

Non-resident Indian (NRI) investors holding mutual fund IDCW options are subject to a higher TDS rate under Section 195 (or the applicable Double Taxation Avoidance Agreement). The TDS rate for NRIs on mutual fund IDCW is 20% (plus surcharge and cess as applicable) for equity fund units and may differ for debt fund units. Form 26AS reflects the actual TDS deducted.

Accessing Form 26AS

Form 26AS is accessible through:

• Income Tax e-filing portal: incometax.gov.in, under “e-file” then “Income Tax Returns” then “View Form 26AS”.
• Net banking: Many banks provide a direct link to Form 26AS from the taxpayer’s net banking account.
• Traces portal: tdscpc.gov.in (TRACES), the TDS reconciliation portal of the Income Tax Department.

Form 26AS is a PDF download; it is also viewable online. It is updated periodically as TDS returns filed by deductors (AMCs) are processed.

Claiming TDS credit in the ITR

IDCW income from mutual funds is taxable as “Income from other sources” (Schedule OS) in the ITR. The TDS reflected in Form 26AS under Section 194K can be claimed as a credit against the tax liability computed on IDCW income. In ITR-2 or ITR-3:

1. Declare gross IDCW income in Schedule OS.
2. Claim TDS credit in Schedule TDS, referencing the TAN of the AMC (as shown in Form 26AS).
3. The net tax payable is reduced by the TDS credit.

If TDS exceeds the tax liability (e.g., because the investor is in a nil or low tax bracket), a refund of the excess TDS is available by filing the ITR.

Reconciliation: Form 26AS vs IDCW statement

Investors should reconcile their Form 26AS TDS entries with the IDCW payout history shown in the CAMS account statement or KFin account statement. Specifically:

• Total IDCW received from each AMC should sum to the gross amount before TDS
• 10% of the amount exceeding Rs 5,000 (per AMC) should equal the TDS shown in Form 26AS
• If Form 26AS shows no TDS but IDCW received exceeds Rs 5,000, the AMC may have failed to deduct TDS or to file the TDS return correctly; the investor should contact the AMC

Discrepancies between Form 26AS TDS and the expected TDS are also visible in the AIS under the TDS information section.

Form 26AS vs AIS

Form 26AS has been progressively narrowed to its core function of TDS credit recording, while the AIS provides the broader consolidated tax-information record. For mutual fund investors:

• Form 26AS: Use to verify TDS credits (Section 194K) and claim them in the ITR.
• AIS: Use to verify the full picture of purchase, redemption, and dividend transactions reported by RTAs.

Both documents should be reviewed before filing an ITR.

See also

• AIS for mutual fund transactions
• Annual Information Statement
• ITR-ready capital gains statement
• CAMS mutual fund account statement
• KFintech mutual fund account statement
• Mutual fund

References

1. Income Tax Act, 1961, Section 194K – TDS on mutual fund income (inserted by Finance Act 2020).
2. Finance Act 2020 – Abolition of DDT and introduction of investor-level dividend taxation.
3. Income Tax Act, 1961, Section 203AA – Form 26AS (annual statement of tax deducted/collected).
4. CBDT circular on Section 194K applicability (2020).
5. TRACES portal documentation, tdscpc.gov.in (accessed May 2026).