Ch.8 · Capital Gains Tax on Mutual Funds · medium
What is 'Section 194K' and its relevance to mutual fund distributions?
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EXPLANATION
Section 194K was introduced by Finance Act 2020 (effective April 2020) specifically for mutual fund IDCW distributions. It requires AMCs to deduct TDS at 10% on IDCW payments to resident individuals when the total IDCW from all schemes of that AMC to a particular investor exceeds ₹5,000 in a financial year. This replaced the DDT system where AMCs paid tax before distributing.
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