Budget 2026: New rule of tax on mutual fund dividends, now entire money will be under tax net, big relief ended

News India Live, Digital Desk: An important tax change has been made in Budget 2026 for mutual fund and stock market investors. Now the rules for calculating tax on dividend income from mutual funds have been made more stringent. According to the proposals of Budget 2026, from April 1, 2026, no interest deduction will be available on dividend income from mutual fund units or shares.1. What was the old rule? (Old Rule) According to the rule till now, if an investor had taken a loan to buy a mutual fund or shares, then he could deduct the interest paid on that loan from his dividend income. Limit: This deduction was limited to a maximum of 20% of the total dividend income. Example: If you received ₹ 1,00,000 dividend and you paid ₹ 30,000 interest, then you can deduct ₹ 20,000. (20%) and paid tax only on ₹ 80,000.2. What changed now? (The Change) The new budget proposes to amend section 93(2) (under the possible new Income Tax Act 2025): Zero deduction: Now there will be no deduction for interest paid on loans taken to earn dividend income. Tax on entire income: Now the entire dividend amount (Gross Dividend) you receive will be added to your ‘Income from Other Sources’ and taxed on it as per your tax slab. It will take.3. Which investors will be affected the most? HNIs and corporate treasury: For those big investors who borrow huge amounts of money (leverage) to invest in the market, the cost of investment will increase significantly. Margin traders: Investors who buy dividend-paying shares by taking margin from brokers, will no longer get any tax benefit on interest. Ordinary investors: There will be no direct impact of this change on those who invest from their savings and do not take loans.4. Other important tax changes of Budget 2026Buyback: Now income from buyback of shares by companies will be taxed as capital gains instead of ‘dividend’. Increase in STT: Securities Transaction Tax (STT) rates on futures and options (F&O) have been increased, making short-term trading expensive. SGB Tax: Sovereign Gold Bond Tax exemption on (SGB) will now be available only to those who have purchased it directly from RBI; Those buying from the secondary market will now have to pay tax.