Dividend on WebNotes

Pledged shares and corporate actions on Zerodha

Wed, 01 Jul 2026 00:00:00 +0000

Overview

Pledging idle holdings for collateral margin raises an obvious question at the next dividend or bonus: does the company still treat you as the shareholder? On Zerodha , the answer for almost every corporate action is yes, and the reason is structural. Under the pledge system effective 1 August 2020, a pledge is only a marking in the depository. The shares never leave your own demat account, so the registrar and the company still see you as the owner of record when they decide who is entitled to a dividend, a bonus or a split.

Growth option vs IDCW option in mutual funds

Tue, 12 May 2026 00:00:00 +0000

Every open-ended mutual fund scheme in India offers at least two investment options: the growth option and the IDCW (Income Distribution cum Capital Withdrawal) option. Each option maintains a separate NAV and represents a different mechanism for the investor to receive value from the scheme’s portfolio performance, though both options invest in an identical underlying portfolio managed by the same fund manager.

The choice between growth and IDCW is one of the most consequential structural decisions for a mutual fund investor, primarily because of its tax implications.

How to receive and reinvest a dividend on Zerodha

Tue, 12 May 2026 00:00:00 +0000

A dividend is a distribution of a company’s profits to its shareholders, typically declared by the board of directors and approved at the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM). Dividends in India are paid in cash directly to the registered bank account of the shareholder; no action is required from the shareholder to receive a dividend.

Zerodha clients receive dividends automatically from the company’s Registrar and Transfer Agent (RTA) via NEFT/RTGS to the bank account linked to their Zerodha demat account. Zerodha does not charge any fee for dividend credit.

IDCW, Income Distribution cum Capital Withdrawal

Tue, 12 May 2026 00:00:00 +0000

IDCW (Income Distribution cum Capital Withdrawal) is the official name, effective 1 April 2021, for what was previously called the “dividend” option in Indian mutual fund schemes. SEBI mandated the renaming through Circular SEBI/HO/IMD/DF3/CIR/P/2020/235 (dated 9 December 2020) to more accurately describe the economic nature of the distribution: unlike a corporate dividend which is paid from profits without reducing the share price proportionally on the ex-date, a mutual fund IDCW distribution reduces the scheme’s NAV by exactly the distribution amount per unit on the record date, because the money distributed to investors comes out of the scheme’s corpus.

TDS on MF dividend (IDCW) for residents (Section 194K)

Tue, 12 May 2026 00:00:00 +0000

TDS on IDCW from mutual funds for resident investors is governed by Section 194K of the Income Tax Act 1961, introduced by the Finance Act 2020 effective 1 April 2020. Section 194K requires a mutual fund to deduct tax at source at 10% on any income (specifically IDCW – Income Distribution cum Capital Withdrawal, formerly called dividend) credited or paid to a resident investor, where the aggregate IDCW from that mutual fund scheme exceeds Rs 5,000 in a financial year. IDCW income is included in the investor’s total income under Section 56(2)(i) and taxed at the applicable slab rate; the 10% TDS is a withholding that is credited against the investor’s total tax liability.