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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation

A resident individual receives a dividend of Rs 60,000 from a mutual fund scheme during the year. How is this dividend taxed in the investor's hands?

Mutual fund dividends are taxed in the investor's hands as income from other sources, added to total income and charged at the applicable slab rate. They are not exempt and are not treated as capital gains.

  1. AExempt from tax in the hands of the investor
  2. BTaxed at 10% flat as a capital gain
  3. CAdded to total income and taxed at the investor's applicable slab rateCorrect
  4. DTaxed only if it exceeds Rs 1,00,000 in the year

Explanation

Since the abolition of the dividend distribution tax, mutual fund dividends are taxable in the investor's hands as income from other sources at the slab rate. They are not treated as capital gains, and no exemption applies to them.

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