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

Under the current Indian income-tax framework taught in NISM-Series-V-A, how is the dividend (IDCW) received by a resident individual from a mutual fund scheme taxed in the investor's hands?

IDCW from a mutual fund is taxed in the investor's hands at the applicable slab rate as income from other sources, because Dividend Distribution Tax no longer applies. It is neither exempt nor a capital gain, and no flat rate applies to resident individuals.

  1. AExempt from tax in the hands of the investor
  2. BTaxed at the investor's applicable slab rate as income from other sourcesCorrect
  3. CTaxed at a flat 10% with no slab linkage
  4. DTaxed as short-term capital gain

Explanation

Since the abolition of Dividend Distribution Tax, IDCW is taxable in the hands of the unit holder at the applicable slab rate under income from other sources. It is not exempt and is not treated as capital gains. A flat 10% rate does not apply to resident individuals' IDCW.

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