How-to IDCW MF tax

How to handle mutual fund IDCW tax

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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

AspectGrowthIDCW
Tax timingDeferred to redemptionAnnual on payout
Tax rateEquity LTCG 12.5% / Debt slabSlab rate
TDSOnly on NRI redemption10% above Rs 5,000
CompoundingFullReduced by distributions

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

See also

External references

References

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

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