InvestorQ : That is the understanding. All dividends paid by companies and MFs would be subject to TDS at 10%. However, these dividends will be treated as income and taxed at peak rates and TDS can be adjusted. Whether this applies to capital gains is not clear
vaishnavi mhatre made post

That is the understanding. All dividends paid by companies and MFs would be subject to TDS at 10%. However, these dividends will be treated as income and taxed at peak rates and TDS can be adjusted. Whether this applies to capital gains is not clear

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vidhya Laxmi answered.
8 months ago


You are correct that the TDS of 10% will apply to all dividends paid. This would effectively amount to 11.648% as it will include the 12% surcharge and the 4% cess also. The CBDT has already clarified that such TDS will not apply to capital gains, as they would be hard to track. TDS deduction will, therefore happen only in case of dividends paid out by dividend plans and not to growth plans where the income distribution happens through the accretion of capital gains.