The Sens on Thursday crashed over 2,700 points, its biggest single-day plunge in about two years, in lockstep with a severe sell-off in global markets after Russia launched a full-scale invasion of Ukraine. The 30-share BSE gauge plummeted about 2,850 points during the session before closing at 54,529.91, registering a massive fall of 2,702.15 points or 4.72 percent. This was its biggest decline since March 23, 2020, and the fourth-worst fall ever in absolute terms.
FII and DII:
Foreign institutional investors (FII) sold shares worth Rs 6,448.24 crore on February 24, and domestic institutional investors (DII) bought shares worth Rs 7,667.75 crore, as per provisional data available on NSE and BSE. As of February 23, 2022, FII sold Rs 3,417.16 crore of equities, while DII bought shares worth Rs 3,024.37 crore, as per provisional data available on NSE. On the Sens chart, all 30 shares suffered heavy losses, with Indus Ind Bank tumbling the most at 7.88 percent, followed by M&M, Bajaj Finance, Axis Bank, Tech Mahindra, and Maruti.
Closing Bell: Sense closes 2,700 points down, Nifty below 16,300 as Russia invades Ukraine. The NSE barometer Nifty nosedived 815.30 points or 4.78 percent to end at 16,247.95. This was also the seventh straight session of decline for both the key indices. Investors were poorer by about Rs 13 lakh crore, with the market capitalization of BSE-listed companies standing at Rs 2,42,24,179.79 crore.
Union Budget 2022: HNIs can’t evade taxes through ‘bonus stripping’ from April 2023:
Union Budget 2022: Section 94(8) of the Income Tax Act covers the taxation of bonus units of mutual funds, thereby preventing bonus stripping by the taxpayer. However, the rule was not applicable to bonus equity shares of companies. The Budget changes that.
Wealthy investors, who routinely suppressed their tax liabilities through a practice known as bonus stripping, will no longer be able to do that from April 1, 2023. That is because of an amendment introduced to the Income Tax Act in the Budget.
First foremost, what is bonus stripping?
Assume an investor buys 1000 shares of a company at Rs 100 each. Soon after, the company declares a bonus issue in the ratio 1:1. The price of the stock now drops to Rs 50 (because there are twice as many shares in the market now). The investor now has 2000 shares of Rs 50 each. He will sell 1000 shares at Rs 50 and show it as a loss in his books since he had bought the shares at Rs 100 apiece. This loss of Rs 50,000 can then be set off against the capital gains made in other transactions. Remember, the investor is still holding the balance of 1000 shares he received as a bonus.
What has the government done?
Section 94(8) of the Income Tax Act covers the taxation of bonus units of mutual funds, thereby preventing bonus stripping by the taxpayer. However, the rule was not applicable to bonus equity shares of companies. The Budget changes that. Bonus shares, units, etc. can be used for tax avoidance wherein a person may buy shares/units just when the bonus is announced by the issuer and after the bonus shares/units are granted, the price of shares/units ordinarily falls to adjust for increased shares/units. The person may immediately sell some of those shares/units and applying the FIFO method, can claim a loss on the sale of those shares/units. "Under Bonus stripping provisions, the loss so generated is not allowed to be claimed in the computation of income if the units are sold within 9 months. The provision as of now is applicable on Mutual fund units but is sought to be extended to shares and units of REITs/Invites as well," said Sandeep Sehgal, Tax-Partner, AKM Global, a tax and consulting firm.
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