At
the time of distributing a dividend, the mutual fund (MF) Asset Management
Company (AMC) is required to pay a dividend distribution tax (DDT). Therefore,
even though your AMC has declared a dividend of Rs. 10, you may receive a
smaller amount owing to the deduction of DDT. The DDT is not applicable on
equity schemes or /stocks.
Investors
should be aware of the origin of dividends. The quantum of dividend depends on
the performance of the fund.
If
the fund performs in tandem with well performing markets, the fund will be able
to declare higher dividends. The dividend decision is taken by an AMC in
consultation with the Trustees of the MF.
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