One of the defining characteristics of mature consumer markets is not simply the abundance of products, but the quality of consumer decision-making. Across sectors, rising financial awareness, easier access to information and digital discovery are changing what people choose to buy and how they
Imagine reaching retirement with a bond portfolio that works like a staircase. One bond matures this year, another next year, and another the year after, giving you access to money at different points instead of having to unlock the entire investment at once
Augmont Enterprises IPO Day 2: The initial public offering (IPO) of integrated gold and silver platform Augmont Enterprises Ltd is witnessing its second day of bidding today, August 24. So far, the public issue has been subscribed 2.88 times. The Rs 825-crore IPO
Gold prices remain high in India; check 22K, 24K rates in Mumbai, Delhi, Bengaluru International gold prices also climbed to a more than three-month high on Monday. Published on: Aug 24, 2026, 13:46:24 IST By HT News Desk Prefer HTon Google Share via Copy link Gold prices remained high in India on
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Big tax change for investors! Budget 2026 sets new rule for interest against MF, dividend income
Big tax change for investors! Budget 2026 sets new rule for interest against MF, dividend income
The Union Budget 2026 has proposed a significant change that directly affects investors who borrow funds to invest in dividend-paying stocks or mutual funds. The proposal removes the existing tax benefit that allowed investors to claim a deduction on interest paid for such borrowings.
Currently, taxpayers are permitted to deduct a portion of the interest expense incurred for earning dividend income or income from mutual fund units, subject to a prescribed limit. This relief has been particularly relevant for investors who use borrowed money to build income-generating portfolios.
However, this is set to change.
“It is proposed to provide that no deduction shall be allowed in respect of any interest expenditure incurred in relation to dividend income or income from units of mutual funds, and to omit the existing provision permitting such deduction subject to a specified ceiling,” the Budget documents say.
Under the existing provisions of Section 93 of the Income-tax Act, 2025, investors are allowed to claim interest expenses as a deduction, but only up to 20% of the gross dividend or mutual fund income earned.
For instance, if an investor earns ₹1,00,000 as dividend income and has paid ₹25,000 as interest on borrowed funds, the allowable deduction is restricted to ₹20,000, which is 20% of the dividend income.
This mechanism provided partial tax relief to investors who leveraged borrowings to generate income from equities and mutual funds.
The Budget proposes to amend Section 93 of the Income-tax Act, 2025, effectively withdrawing this benefit altogether.
“It is proposed to amend section 93 of the Income-tax Act, 2025 to provide that no deduction shall be allowed in respect of any interest expenditure incurred for earning dividend income or income from units of mutual funds taxable under the head “Income from other sources”,” the Income-tax Department said.
As per the proposed amendment, no interest expense will be allowed as a deduction against dividend income or income from mutual fund units. This applies regardless of whether the borrowing can be directly linked to the income earned.
The Income Tax Department has further clarified that once the amendment takes effect, dividend income and income from mutual fund units will be computed without allowing any reduction for interest expenses.
Importantly, this restriction will apply to all taxpayers, including individual investors.
After the amendment, even if an investor has taken a loan specifically for investing in dividend-yielding stocks or mutual fund schemes, the interest paid on that loan will not be eligible for any tax deduction.
This change alters the tax efficiency of leveraged investment strategies and is likely to impact how investors approach dividend and mutual fund income going forward.
Source: Msn.com
Source: OfficeNewz
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