Is dividend income earned from a mutual fund is exempted from income tax?

Is dividend income earned from a mutual fund is exempted from income tax?

Dividend income earned from a mutual fund is exemped if the 50% fund of the MF is invested in stocks. It is fully exempted in ELSS funds.

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Originally Posted by Rahul

Dividend income earned from a mutual fund is exemped if the 50% fund of the MF is invested in stocks. It is fully exempted in ELSS funds.

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Is there any condition attached to it like after one year of holding of MF?

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Originally Posted by Rajat Gupta

Is there any condition attached to it like after one year of holding of MF?

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The above rebate is for equity MFs -
If you sell the units within a year of buying, it will attract a short-term capital gains tax of 10%.
If you sell the units after a year, no long-term capital gains tax.

It is exempt under sec 10 of income tax act.

Irrespective of the Holding period, the dividend from Mutual Fund is Exempt from Tax.

This is because, while giving dividend, the MF Company already pays Dividend Distibution Tax (DDT).