Question

5.A mutual fund deducts _________ from the dividend paid.

A) income tax
B) security transaction tax
C) Dividend distribution tax
D) wealth tax
​

Answer 1

Answer:

The Finance Act, 2020 also imposes a TDS on dividend distribution by mutual funds on or after 1 April 2020. The standard rate of TDS is 10% on dividend income paid in excess of Rs 5,000 from a company or mutual fund..

OR

When a mutual fund pays a dividend, the value of each share is reduced proportionately. ... When you receive the dividend distribution, you could either keep the cash or reinvest it in additional shares of the mutual fund at the reduced net asset value.

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