IDCW is the acronym for Income Distribution cum Capital Withdrawal. In Apr 2021, Securities and Exchange Board of India (SEBI) changed the term ‘Dividend option’ in Mutual Funds to IDCW. Mutual funds’ income can either originate from Dividends paid by stocks or from Capital Gains made through selling of stocks. According to SEBI, this income is essentially coming out of investors’ capital. In other words, this is tantamount to withdrawal of capital. Dividends paid by mutual funds can stem from dividend income or capital gains or a combination of both.