Under scrutiny by the government and the regulator Sebi, fund houses have pleaded ‘not guilty’ to allegations of indulg-ing in ‘dividend stripping’ — an illicit practice used for possible tax evasion through investments in mutual funds.
The matter is likely to be discussed later this week at a board meeting of mutual fund industry body and front-line regulator AMFI (Association of Mutual Funds in India).
Dividend stripping typically involves an inves-tor buying a dividend plan of a mutual fund scheme, booking a loss on it and then set it off against capital gains from other sources.
Citing some media reports on this matter, the government recently wrote to Sebi, which is mandated to regulate mutual fund space, to look into the matter. Su-bsequently, Sebi wrote to the fund houses, seeking their clarification on this matter.
Most of the fund houses, however, have informed Sebi that they were not adopting any such techniques.
