Taxability on devidend distributed by mutual funds

The dividend received in hands of unit holder for an equity mutual fund is completely tax free. The dividend is also tax free to the mutual fund house. This means, the fund house is also not liable to pay any tax on the dividend received. Thus for equity mutual fund, dividend is tax free for both—unit holder and fund house.

The dividend income received by a unit holder on his debt mutual fund is also tax free. But, the mutual fund company has to pay a dividend distribution tax (DDT) before distributing this income to its investors.

Sir

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