Guide to Mutual Funds
Module Units
- 1. Introduction: Mutual Funds
- 2. How Does a Mutual Fund Investment Work?
- 3. Different Types of Mutual Fund Schemes
- 4. How Can a Customer Invest in Mutual Fund
- 5. Fundamental Attributes of Mutual Fund Scheme
- 6. Types of Mutual Funds
- 7. Concept of AUM
- 8. Equity Mutual Funds
- 9. Debt Mutual Funds
- 10. Hybrid Mutual Fund
- 11. Solution-Oriented Schemes
- 12. New Fund Offer (NFO)
- 13. Offer Document
- 14. Types of Risk in Mutual Fund
- 15. Net Asset Value
- 16. How do mutual funds calculate the reserve for declaring dividends?
- 17. Expenses Charged on Mutual Funds
- 18. What is Dividend Distribution Tax & when it is Levied?
- 19. Debt Mutual Funds
- 20. What is Indexation?
- 21. Risk Return and Performance of Funds
- 22. Types of Risks in Popular Mutual Fund Schemes
- 23. Which Factors Affect the Returns in a Mutual Fund Schemes
- 24. Methods Used To Evaluate The Performance Of A Mutual Fund
- 25. Mutual Fund Structure and Constituents
- 26. Key Personnel of an Asset Management Company
- 27. What are the objectives of AMFI?
- 28. Must know Concepts and Terms
- 29. Facilities and services that the investors GetS
- 30. Mutual Fund Advisors
- 31. Types of Commission for Mutual Fund Advisors
- 32. Mutual Fund Frequently Asked Questions
- 33. What are the KYC requirements?
What is Dividend Distribution Tax & when it is Levied?
Dividend income from mutual funds was tax-free in the hands of the investor. However, in Budget 2020, Finance Minister Nirmala Sitharaman abolished the Dividend Distribution Tax (DDT). Now the burden of paying tax on dividends is transferred to the shareholders.
Companies are not liable to pay Dividend Distribution Tax (DDT) while distributing dividends to shareholders.
What is Dividend Distribution Tax (DDT)?
According to the Income Tax Act, a company distributing a dividend has to pay a tax on the total dividend amount. This is known as the dividend distribution tax (DDT). It is a tax on dividends distributed by equity and debt-oriented mutual fund schemes.
Who is eligible to pay Dividend Distribution Tax?
Under section 115-O of the Income Tax Act, any domestic company that declares and distributes dividends is liable to pay the Dividend Distribution Tax (DDT). The company is required to pay the DDT within 14 days of declaring, distributing, or paying the dividend, whichever is earliest.
If the company fails to pay the dividend tax within the stipulated time, it will be charged an interest of 1% every month until the DDT is paid to the government.
Dividend Distribution Tax in Mutual Funds
DDT is also applicable to mutual funds:
To determine the investment goals, you have to understand the tax implications & charges.
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