How to fill Schedule OS for mutual fund dividend (IDCW) in ITR
Schedule OS in ITR captures “Income from Other Sources” including mutual fund dividends (IDCW). Post Finance Act 2020, DDT (Dividend Distribution Tax paid by AMC) was abolished; dividends are now fully taxable in the investor’s hands at slab rate. Section 194K TDS applies above Rs 5,000 per AMC.
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Step-by-step procedure
See the procedure infobox above.
Pre-2020 vs post-2020 tax treatment
| Period | Dividend tax in investor’s hand |
|---|---|
| Up to FY 2019-20 | Tax-free up to Rs 10 lakh (Section 10(34) exemption); above Rs 10 lakh: 10% under Section 115BBDA |
| FY 2020-21 onwards | Slab rate on full dividend (DDT abolished by Finance Act 2020) |
Most current retail investors face slab-rate taxation on IDCW.
Why IDCW is in Schedule OS
| ITR Schedule | What it captures |
|---|---|
| Schedule S | Salary income |
| Schedule HP | House property |
| Schedule CG | Capital gains |
| Schedule OS | Other sources (dividend, interest, lottery, etc.) |
| Schedule BP | Business / professional |
Mutual fund dividend (IDCW) classified as dividend income → Schedule OS.
Section 194K TDS details
AMCs deduct TDS on IDCW per Section 194K:
| Threshold | Rate |
|---|---|
| Up to Rs 5,000 per AMC per FY | No TDS |
| Above Rs 5,000 per AMC per FY (with PAN) | 10% |
| Without PAN | 20% |
| For NRI | 20% (separate Section 195) |
TDS deducted is visible in Form 26AS / AIS. Claim as credit in ITR.
IDCW Payout vs Reinvest
| Variant | What happens | Tax |
|---|---|---|
| IDCW Payout | Cash credit to bank | Taxable as IDCW |
| IDCW Reinvest | New units issued (NAV at IDCW date) | Same: IDCW taxable; reinvested units’ cost basis = IDCW value |
Reinvest doesn’t avoid tax; it’s just a different distribution mechanism.
Worked example
Investor’s FY 2024-25 IDCW:
- AMC 1 Equity Hybrid IDCW: Rs 12,000 (Payout to bank).
- AMC 2 Debt Liquid IDCW: Rs 4,000 (Reinvest).
- AMC 3 ELSS IDCW: Rs 8,000 (Reinvest).
Tax:
- Total IDCW: Rs 24,000.
- Section 57 deduction: 0 (no borrowed funds).
- TDS deducted (Section 194K, AMC 1 and AMC 3 above Rs 5k threshold): 10% × (Rs 12k + Rs 8k) = Rs 2,000.
- Taxable in slab rate: Rs 24,000.
At 30% slab + 4% cess: Rs 7,488 total tax. Less TDS Rs 2,000 = Rs 5,488 residual tax.
Section 57 deduction
If you borrowed money to buy MF units (e.g., loan against securities to invest in MFs):
- Interest paid on borrowing is deductible up to 20% of the dividend income.
- Rare for retail; typically not applicable.
See also
- How to choose ITR form for MF
- How to report MF capital gains in ITR
- How to fill Schedule CG (MF)
- How to claim TDS on MF dividend in ITR
- How to reconcile Form 26AS with MF transactions
- How to claim TDS 194K in ITR
- How to decide growth vs IDCW option
- How to handle foreign MF in ITR
- How to revise ITR (MF)
- How to choose old vs new tax regime (MF)
- Income Distribution cum Capital Withdrawal (IDCW)
- Growth option (MF)
- Section 194K (TDS on MF income)
- Section 57
- Section 115BBDA (legacy dividend tax)
- Section 195 (NRI TDS)
- Dividend tax (Finance Act 2020)
- Schedule OS
- Form 26AS
- Annual Information Statement (AIS)
- Mutual funds in India
- AMFI
- SEBI
External references
References
- Income Tax Act, 1961, Sections 56, 57, 194K, 115BBDA.
- Finance Act, 2020 - DDT abolition.
- CBDT clarifications on Section 194K.
- AMFI Best Practice Guidelines on TDS reporting.