If the dividend receipts from mutual fund units are tax free under section 80 L, what will be the status of tax rebate due to the new budget provision whereby the MF will have to pay 10 per cent tax on total dividend distributed and tax has to be paid indAs an investor, you don't pay any tax on your dividend corpus.
10 Dec 2008
The above statement is partially true. 10 per cent tax on distributed dividend will not be applicable for funds which have invested more than 65 per cent in equity. If the investment is into debt funds or less than 65% in equity, the 10% dividend distribution tax is levied. This tax is levied on the fund, not on the customer. So, as an investor, you don't pay any tax on your dividend corpus.