CBDT clarifies that TDS under section 194K at 10% is deductible only on dividend received from Mutual Fund.

As per the Budget 2020, a new section 194K would be introduced under which TDS at 10% would be deducted on ‘income’ derived by a ‘resident’ from Mutual Funds specified under s. 10 Clause (23D) of the Income Tax Act 1961. Representations were received to clarify the TDS would be deducted only on the amount of dividend or even on the income arising on redemption.

Accordingly, a Press Release was issued by the CBDT on 4th February 2020 clarifying that Mutual Fund would be deducted at 10%b only on dividend income and no tax shall be deducted by the Mutual Fund on income which is the nature of Capital Gains.

Press Release attached for your reference.