Mutual Fund Dividends in MIPs: Is it tax free after retirement

The whole dividend received from Mutual Fund MIP schemes is tax free in your hand. But, please note that the fund house has to pay dividend distribution tax (DDT) before paying dividends to you. This reduces dividend yield considerably. If you are not in the highest tax bracket, you can invest in the growth option of the MIPs and opt for a systematic withdrawal plan (SWP). Through an SWP you withdraw a fixed amount every month and the balance units remain invested (and continues to earn returns).

But, if you are in the highest tax bracket, then the dividend payout option is better as your short term capitals gains will be taxed at a higher rate than the dividend distribution tax (DDT) which is currently at 28.84%.

You may like to check the Top Dividend paying Mutual Fund MIPs