BUDGET
Govt proposes no interest deductions for dividend, MF invest loans
This story was originally published at 20:31 IST on 1 February 2026
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NEW DELHI – The government plans to disallow interest deductions on loans taken to invest in dividend-yielding stocks and mutual funds, effectively scrapping a tax benefit available to investors, according to the Union Budget for 2026-27 (Apr-Mar) presented by Finance Minister Nirmala Sitharaman in the Lok Sabha Sunday.
"It is proposed to provide that no deduction shall be allowed in respect of any interest expenditure incurred in relation to dividend income or income from units of mutual funds, and to omit the existing provision permitting such deduction subject to a specified ceiling," Sitharaman said.
According to industry experts, investors borrowing to invest in dividend stocks or mutual funds will not be able to claim interest deductions, which makes income fully taxable. End
Reported by Vaishali Tyagi
Edited by Vandana Hingorani
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