Wash sale in Mutual funds

An old article in Forbes on Wash sales in mutual funds. In US you cannot claim a short term loss on a security if you buy the security within +/- 30 days of selling the security. This article explains this concept and how to overcome it. As far as India is concerned I haven’t come across any such rule. Though in India if you buy a mutual fund just before ex-dividend date and sell it immediately afterwards then you cannot claim capital loss on it. This is to ensure that investors do not use this mechanism to avoid taxes on their capital gains as dividends of equity mutual funds do not attract tax.

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Author: Bobbur Abhilash

I am a fourth year Doctoral student in the Finance and Control Department at IIM Calcutta.

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