Central Board of Direct Taxes vide Press Release dated 4th February, 2020 has clarified that under section 194K (proposed to be inserted vide Finance Bill, 2020), 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. It is also mentioned in the Press release that necessary clarification, if required, shall be proposed in the relevant provision of the law.
For details, please refer the pdf attachment: Press Release CBDT dated 04.02.2020 Read Here
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Central Board of Direct Taxes (CBDT) Issues Clarification On The Applicability Of TDS Provisions On Mutual Fund Dividend