PPFAS Brings Back Dividend Option in Flexicap Fund: What It Means for Investors PPFAS Brings Back Dividend Option in Flexicap Fund: What It Means for Investors PPFAS Mutual Fund has announced the return of the dividend option in its flexicap Fund., formally called the Income Distribution cum Capital Withdrawal (IDCW) option, in its Flexicap Fund.
Rukun Tarachandani, EVP and Fund Manager at PPFAS MF, emphasized that the change is purely about providing choice. “The only change we are making is the introduction of a new option – IDCW. Apart from this, there is absolutely no change in the fund’s investment philosophy, investment process, or asset allocation pattern. The way we manage your money remains exactly the same,” he said.
He added that the IDCW option could serve as a more tax-efficient choice for certain investors, particularly those in lower tax brackets. “Under this option, any income you receive is added to your total taxable income and taxed as per your individual tax slab,” Tarachandani noted. From 31 October 2025, after the completion of the exit offer period, investors will be able to choose between the Growth and IDCW options. He also advised investors to consult their tax advisors to determine which option is more suitable for their financial situation. What it means for investors Abhishek Kumar, SEBI Registered Investment Advisor, Founder of SahajMoney explains, “IDCW could be a better option for low-income investors since their total income (including IDCW) is taxed as ordinary income at the investor’s applicable income tax slab rate in the year they are received as compared to 12.5% LTCG,”
This is particularly important for investors with an annual income below ₹24 lakh, as opting for a dividend plan could be advantageous. The same applies to debt funds and interest income from fixed deposits, since they are taxed according to the individual’s income slab. Earlier, the lower long-term capital gains (LTCG) benefit on equity was a strong incentive to take on additional market risk.
However, the recent budget narrowed this gap between the ordinary tax rate and equity LTCG tax. For instance, an annual income below ₹24 lakh results in a total tax outgo of ₹3 lakh under
the ordinary slab, translating to an effective tax rate of 12.5%, compared with 11.85% under the LTCG regime after the ₹1.25 lakh exemption. Investors could also consider allocating more to debt funds, fixed deposits, or dividend-oriented equity plans to generate regular income while maintaining tax efficiency. This strategy may help investors balance their portfolios without depending on equities for tax savings and is a more predictable one. Dividends (IDCW) are uncertain - they may not be declared if the fund is unable to deliver good returns in a particular year. They may also be paid from the investor’s own capital as the name suggests - Income Distribution cum Capital Withdrawal in such years. “We urge the investors to consult with their tax advisors on which option (Growth or IDCW) is more suitable for them” said Tarachandani
Source:https://thefynprint.com/investment/ppfas-brings-back-dividend-option-flexicap-fund-what ?id=68dcc33d247a18647384fdb2
