Removal of Interest Deduction on Dividend & Mutual Fund Income

The Finance Bill 2026 removes the ability to deduct interest paid on borrowed funds used to earn dividend income or income from mutual fund units. Previously, such interest could be deductible up to 20% of gross dividend income, but now no deduction is allowed. As a result, dividend income will be taxed on a gross basis, increasing tax liability for leveraged investors. This change does not affect capital gains calculations.

Add a Comment

Your email address will not be published. Required fields are marked *