Dear Shreekanth,
I am confused .
The Manager in HDFC insists Daily or Weekly Dividend is a better option for Liquid funds (And any Non equity fund also) since HDFC will pay DDT 26% and after DDT it becomes Tax free for the Client.
In Growth option ,the profit is taxable and the client ends up paying 30 %.
So since I am in the 30 % bracket, should I opt for Daily or Weekly Dividend.
Thanks
Vijaya
1 Answers
Dear Vijaya,
Yes, from the taxation viewpoint Dividend payout or dividend reinvestment options are tax efficient than growth option.
But do note that very few liquid funds offer Dividend payout option.
In case, payout option is not available, for investors in the highest tax slab of 30 percent, opting for dividend reinvestment would be more tax efficient.
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