Dividend options regain traction among mutual fund investors on income tax relief

Mutual fund investors are increasingly opting for the dividend option due to income tax relief of ₹12 lakh provided under the new tax regime.

Currently, dividend earned from mutual fund investments are clubbed with individual investors’ income and taxed as per their slab rate. Since the Budget has provided provisions for exempting income tax up to ₹12 lakh, many aged people, pensioners and mid-level salaried class investors are preferring dividend option. This provides a regular income for investors rather than just relying on capital appreciation.

Mutual funds distribute dividend or ‘Income Distribution-Cum-Capital Withdrawal’ from the capital gains from its underlying investments. After distribution of income, the fund’s net asset value decreases by the amount paid as dividend.

Read more at: The Hindu businessline