More than 400 equity mutual fund (MF) schemes with the dividend option may lose favour among investors following the Union Budget proposal to levy the dividend distribution tax (DDT) at 10 per cent.
Put together, these sets of schemes have assets under management (AUM) at Rs 1.5 trillion, which is a fifth of the industry's equity assets. These exclude balanced schemes with the dividend option, which too have come under the tax net.
The move to tax dividend-paying schemes is to bring tax parity.