Comments
Mutual funds are operating within the boundaries set for them with regard to dividend declarations, CVR Rajendran, CEO, Association of Mutual Funds of India, told BusinessLine on Thursday.
Capital loss & NAVThis was in the context of capital market regulator SEBI asking fund houses earlier this week if they were resorting to the practice of dividend stripping in their schemes.
When a fund declares a dividend, the investor essentially pockets the dividend but shows the fall in the net asset value as capital loss. This loss is then set off against real capital gains made elsewhere on other investments to reduce the net tax payable. Rajendran, however, insists that fund houses keep to the rules of dividend declaration on their schemes.
A senior fund manager commented that SEBI might conduct a forensic audit into these fund houses and examine the nature of their inflows to check if they allowed dividend stripping.
Back in 2014, fund houses declared bonus units to help some investors cut corners around their taxes, a practice that was called bonus stripping. Once this came to light, industry body AMFI asked fund houses to discontinue their bonus plans.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.