DTC treatment of debt mutual funds

Hi, I wish to know what will be the tax treatment of debt mutual funds under DTC, for both dividend and growth options.

Thanks very much.

asked Aug 10 '11 at 14:46 by Mahadevan Subramanian 1112


After direct tax code implementation, Dividend Distribution Tax (DDT) will be removed from debt and non-equity based mutual funds but now dividends on non-equity funds will be taxable in investor's hand as per his/her slab rates. There will also be a TDS 0f 10% (20% in case of NRI and companies) if dividend is more than 10,000 Rs for non-equity funds.

Growth based debt fund will have new indexation rule, all gains after indexation will be added to taxable income and taxed as per slab rates. 10% income tax will be payable without indexation benefit.

So growth based debt investment will be better choice after Direct tax code.

answered Aug 10 '11 at 21:34 by Pankaj Batra 5.2k320

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Asked: Aug 10 '11 at 14:46

Seen: 2,433 times

Last updated: Aug 10 '11 at 21:35