Three things to know before the next payout thrills you.
01
A dividend from a fund is not new money. The NAV drops by exactly what they pay you, so your wealth before and after is the same rupee. Read the name SEBI gave it. Capital Withdrawal is right there in the label.
02
It is the most expensive way to take cash out. Slab tax up to 30 percent on every payout, against 12.5 percent long-term in Growth, and only when you choose to sell. If you actually need income, redeem units yourself and pick the timing.
03
The real cost is the compounding that never happens. Every rupee paid out is a rupee that stops growing for the rest of your holding. That is how a feeling of income quietly becomes lakhs left on the table.
The brochure calls it a dividend because dividend sounds like profit. The mechanics call it a withdrawal of your own capital, taxed at the worst rate you pay. Pick Growth, and let the money you are not spending keep working.