<h1>CBDT Clarifies TDS Applicability: Section 194K Targets Dividends, Not Capital Gains on Mutual Fund Units.</h1> The Central Board of Direct Taxes (CBDT) clarified the applicability of Tax Deducted at Source (TDS) on mutual fund dividends following the Finance Bill, 2020. The bill proposed removing the Dividend Distribution Tax at the company or mutual fund level, taxing dividends instead in the hands of shareholders or unit holders. TDS at 10% is applicable on dividends exceeding five thousand rupees annually. Queries arose regarding TDS on capital gains from unit redemption. CBDT clarified that TDS under section 194K applies only to dividend payments, not capital gains, with further clarifications to be made in the law if necessary.