Ask us anything about Budget 2020

Hi @rupeshmandal,

No, it is not true. As per clarification issued by CBDT, the following are the changes to keep in mind:

  1. Dividend Income from Equity Shares: TDS u/s 194 will be applicable @10% if total dividend income is more than INR. 5,000.

  2. Dividend Income from Mutual Funds: TDS u/s 194K will be applicable @10% if total dividend income is more than INR. 5,000.

TDS will not be deducted on any gains arising on sale of Mutual Funds.

Read More: Tax Implications on Dividend and Sale of Mutual Funds after Budget 2020

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So better to go for growth options in MF? and then withdraw as per our requirements.

Hi @HSL,

Once TDS will be deducted on the dividend income, the same will be deposited by filing TDS Return Form 26Q by the deductor. And you will be able to see the TDS Deducted in your Form 26AS. And as per the general practice TDS Certificate for the same shall be issued by the deductor.

There is no insertion of a new section for TDS on the interest income from bonds and debentures in Budget 2020. However, as per section 193 TDS is applicable on interest from bonds and debentures @10% if the interest income is more than INR. 5,000.

A MF related question.

Mutual fund profit is @ 3lkhs and it has crossed 365 days. What will be the taxation on this gain?
MF is equity based.


It depends on whether the MF is equity MF or Debt MF. Basis that LTCG or STCG would be applicable.

Your understanding is correct.
No 10 lakh limit. Tds at 10% when dividend exceeds Rs 5000.

It is equity based, but can you please explain how equity and debt differ taxation wise if profit is 3lkh+ and 365days+.

How does Budget 2020 affect investments made in Liquidbees ETF?

Hi @Akarsh,

For FY 2019-20, it will be Long Term Capital Gains (LTCG) and taxable @10%. However, capital gains up to INR. 1,00,000 will be exempt from tax.

Hi @Akhilesh_Peddu,

Section 80-IAC of the Income Tax Act provides a deduction for 100% of the income of an eligible startup for 3 years out of 7 years from the year of its incorporation provided their turnover is up to INR. 25 Cr.

Budget 2020 increased the period to 10 years from 7 years and increased the turnover limit to INR. 100 Cr. from INR. 25 Cr.

The words used are eligible startups hence if the startup fulfils all the conditions mentioned in section 80-IAC, it is eligible to claim deduction benefit.

Budget 2020 has brought in the following changes which would affect investments in Liquidbees ETFs:

  • DDT (Dividend Distribution Tax) has been abolished
  • dividend income which was earlier exempt is not taxable in the hands of the shareholder
  • TDS would be applicable on dividend income since it is now a taxable income
  • TDS u/s 194K is liable to be deducted by the payer on dividend on equity mutual funds
  • TDS u/s 194 is liable to be deducted by the company on dividend on equity shares
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Fractional units as dividends are credit regularly on liquidbees ETF. How the TDS would deducted here?

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Hi @sudheer_kumar,

As per the clarification: A taxpayer having no business income has an option to choose between current and new tax rates every year. But the taxpayers who have business income can only exercise his/her option to switch from New Tax Regime to Current Tax Regime one time. Once an option is exercised it will be locked. And the same needs to be followed by the taxpayer in subsequent years.

Which means:

  1. You opt for the Current Tax Regime during FY 2020-21: Then next year you can either go for the Current or the New Tax Regime. The option to switch from the Current to the New Tax Regime will stay with you.

  2. You opt for the New Tax Regime during FY 2020-21: Then next year you can either go for the New or the Current Tax Regime. But once you switch from a New Regime to Current Regime it will be locked. And you will have to follow the Current Regime in Subsequent Years.


Due to the removal of DDT, dividend income will be taxable at slab rate to NRIs. TDS will be applicable u/s 195 of the Income Tax Act. And the same will be reflected in Form 26AS of the NRI. If that is the only income of NRI then they can file their ITR and claim refund of TDS deducted on dividend income.

what are the eligibility criteria and conditions . can u pls give a few examples ? how the startups like should be ?

is it for the manufacturing only ? is it also applicable if I start a trading cum retail wholesale business of anything ?

ETFs like Liquid Bees earn a daily dividend on the invested amount. These units are reflected in the Demat account. As per Section 194K, TDS should be deducted at the time of credit of income to the payee’s account or at the time of payment of dividend, whichever is earlier.

In our opinion, TDS should be deducted when the dividend in the form of units are credited to your account. However, there is no clarification issued on the same by the income tax department.

in such case ; do we get the TDS certificate and dividend certificate from the “liquidbees” etf mutual fund ;; daily everyday ?


TDS Certificate is issued only once the TDS Return is filed by the deductor. TDS Return is filed at the end of each quarter.

Once the section becomes applicable from 1st April, 2020, we would get a better clarity based on how the AMCs implement the provisions of Section 194K on distributing dividends on mutual funds.

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Hey @Quicko
I’ll be graduated last year from college. My parents paid for my fees. They used to transfer the money in my account, which I used to pay my college tuition with. The total amount would have around 10L. I have some trading profit (fno) along with salary >20Lakh in this year.

Assume, If I transfer that money back to their account(may or may not with some interest). So, can I show that 10 Lakh as Loan and claim as a one-time deduction while paying tax?

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seriously interested in getting an answer to that question too as i’m curious too. thanks in advance