How-to IDCW MF tax

How to handle mutual fund IDCW tax

From WebNotes, a public knowledge base. Last updated 19 May 2026. Reading time ~3 min.

Key facts

Tax	Slab rate as 'income from other sources'
TDS	10% under Section 194K if IDCW > Rs 5,000 / year
Mechanism (post 2020)	Investor-level taxation (DDT abolished)
Reporting	ITR Schedule OS (Other Sources)

MF IDCW tax is slab-rate post 2020 Finance Act (DDT abolished). TDS 10% under Section 194K above Rs 5,000 threshold.

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Tax-disclaimer. Tax rules change annually. This guide reflects FY 2024-25 / AY 2025-26 rules. Consult CA for personalised advice.

Step-by-step procedure

See the procedure infobox above for the six steps.

Growth vs IDCW comparison

Aspect	Growth	IDCW
Tax timing	Deferred to redemption	Annual on payout
Tax rate	Equity LTCG 12.5% / Debt slab	Slab rate
TDS	Only on NRI redemption	10% above Rs 5,000
Compounding	Full	Reduced by distributions

For retail investors in growth-orientation: choose growth option.

External references

References

Income Tax Act, 1961, Section 194K.
Finance Act, 2020 (DDT abolition).
SEBI (Mutual Funds) Regulations, 1996.
AMFI Best Practice Guidelines.

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Last reviewed: 19 May 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.