Raise TDS limit to Rs. 50,000: AMFI urges FinMin

The mutual fund industry has urged the government to increase the threshold for withholding tax (TDS) on dividend to Rs. 50,000 per annum from the current level of Rs. 5,000 per annum.

In a pre-Budget representation, the Association of Mutual Funds in India (AMFI) said the current threshold for TDS on dividend has been causing hardship to retail investors particularly when TDS on banks’ fixed deposit was raised from Rs. 10,000 to Rs. 40,000 a couple of years ago.

The current regulations cover tax treatment on consolidation of schemes; however, consolidation of “Options” within the same MF scheme are not covered, leaving ambiguity in taxation in case options were to be consolidated.

Extending the existing tax treatment to consolidation of options within an MF scheme would bring parity and reduce the tax burden on unit-holders, it added.