I got a mail from Sundaram mutual fund as below.
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Dear Investor,You may be aware that the Finance Act 2020 has removed the Dividend Distribution Tax (DDT) at the mutual fund level, and tax dividends in the hands of investors effective April 1, 2020.Consequently, we are obligated to deduct tax at source on dividends to investors, subject to the aggregate dividend exceeding ₹5000 at the PAN level for the financial year.However, on account of practical difficulties involved due to unique nature of mutual fund investments and different schemes involved, we shall deduct TDS from each dividend declared i.e. even without reaching INR 5,000 threshold. In case the total TDS exceeds the actual tax liability of any investor, he/she can claim a refund while filing income-tax return.Tax will be deducted at 10% for resident investors. In the absence of a valid PAN, tax will be deducted at 20%. For NRIs, tax will be deducted at 20%. The rates are subject to applicable surcharge and cess, if any.As this may affect the post-tax cash flows that you may receive from any dividend payouts, you may want to, in consultation with your advisor, switch into the Growth option. Further, you may also want to evaluate Systematic Withdrawal Plans (SWP) - which may be a more tax-efficient method to derive regular cash flows from your investment based on your current tax bracket.
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Even those whose taxable income is less than minimum, deduction of Tax ie TDS is it legal. Is there no provision like form 15G or form 15H with which it can be avoided.
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Dear Investor,You may be aware that the Finance Act 2020 has removed the Dividend Distribution Tax (DDT) at the mutual fund level, and tax dividends in the hands of investors effective April 1, 2020.Consequently, we are obligated to deduct tax at source on dividends to investors, subject to the aggregate dividend exceeding ₹5000 at the PAN level for the financial year.However, on account of practical difficulties involved due to unique nature of mutual fund investments and different schemes involved, we shall deduct TDS from each dividend declared i.e. even without reaching INR 5,000 threshold. In case the total TDS exceeds the actual tax liability of any investor, he/she can claim a refund while filing income-tax return.Tax will be deducted at 10% for resident investors. In the absence of a valid PAN, tax will be deducted at 20%. For NRIs, tax will be deducted at 20%. The rates are subject to applicable surcharge and cess, if any.As this may affect the post-tax cash flows that you may receive from any dividend payouts, you may want to, in consultation with your advisor, switch into the Growth option. Further, you may also want to evaluate Systematic Withdrawal Plans (SWP) - which may be a more tax-efficient method to derive regular cash flows from your investment based on your current tax bracket.
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Even those whose taxable income is less than minimum, deduction of Tax ie TDS is it legal. Is there no provision like form 15G or form 15H with which it can be avoided.