Currently, the onus of declaring capital gains for taxation lies with the investor or unitholders.
PTI |
Last Updated: Feb , ,
PM IST
BCCL
This offers clarity from the tax department on whether the budget proposal asking asset managers to deduct taxes on “income” made by investors in schemes would extend to capital gains as well.
Finance Minister Nirmala Sitharaman had in Budget – scrapped dividend distribution tax (DDT) paid by companies and mutual funds on dividend paid to shareholders or unit holders.
In place, it was proposed to levy tax deducted at source ( TDS ) of (per cent on dividend / income paid by a) (company or mutual fund to its share / unit holder if the amount of such dividend / income exceeds Rs 5 , 06 in a year.
In a statement, the (Central Board of Direct Taxes (CBDT) said queries have been raised if mutual fund would be required to deduct TDS also on the (capital ) gains arising on redemption of units.
“It is hereby clarified that under the proposed section, a mutual fund shall be required to deduct TDS at per cent only on dividend payment and no tax shall be required to be deducted by the mutual fund on income which is in the nature of capital gains, “it said.
It went on to state that necessary clarification , if required, shall be proposed in the relevant provision of the law.
( The clarification read this:)
The Finance Bill, proposed to remove Dividend Distribution Tax (DDT) at the level of Company / Mutual Fund and proposed to tax the same in the hands of share / unit holder. It was also proposed to levy TDS at the rate of % on the dividend / income paid by the Company / Mutual Fund to its share / unit holder if the amount of such dividend / income exceeds five thousand rupees in a Financial Year.
Queries have been received to the effect that whether under the proposed section K, the Mutual Fund would be required to deduct TDS also on the capital gains arising on redemption of units. It is hereby clarified that under the proposed section, a Mutual Fund shall be required to deduct TDS @ 10% only on dividend payment and no tax shall be required to be deducted by the Mutual Fund on income which is in the nature of capital gains. Necessary clarification, if required, shall be proposed in the relevant provision of the law.
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