AMFI is likely to seek clarification from Central Board of Direct Taxes (CBDT) on the government’s proposal to levy TDS in mutual funds, said three people familiar with the development.
The trade body would seek the CBDT’s guidance on whether the TDS introduced in mutual funds is applicable on dividend income only or capital gains or both.
CBDT’s response will clear the ambiguity on whether the TDS proposed on mutual funds income refers to dividend income only or it will be applicable on MF redemption proceeds, irrespective of dividend income or capital gains.
Budget 2020 has proposed that if income from MF units is over Rs.5000, fund houses have to levy 10% TDS. Currently, fund houses deduct TDS of 15% in equity funds and 30% in debt funds from NRI investors. There is no provision to deduct TDS from domestic investors.
Investors can claim refund on this TDS based on their tax liability at the time of filing returns.
