Dividend stripping

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Aastha

Aastha (Querist)
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10 December 2011 what is dividend stripping? Please tell me in detail.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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10 December 2011 Dividend stripping involves buying a stock cum-dividend just before it goes ex-dividend.

Shares are sold after becoming ex-dividend, so as to take the advantage of dividend as well as to book ST capital loss or business loss. Such loss arises due to the fact that shares usually fall ex dividend by the amount of the dividend.

Restriction has been put by section 94(7) on claiming of such loss to the extent of dividend received. You may refer the section for more details.

Aastha

Aastha (Querist)
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14 December 2011 ok...thanks but is this dividend exempted or taxable...?

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