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Budget 2022: Crypto Tax, No Bonus Stripping and Twitter Threads

Budget 2022: Crypto Tax, No Bonus Stripping and Twitter Threads

Budget 2022: The Big Thread on all things that will be super important today! #Budget2022 Our thoughts on the budgets, live tweeted. And then, the Cryto tax of 30%, the lack of bonus stripping any further and other strange things in the budget.

CM Team3 min read
Quick Facts
What is "Budget 2022: Crypto Tax, No Bonus Stripping and Twitter Threads" about?
Budget 2022: The Big Thread on all things that will be super important today! #Budget2022 Our thoughts on the budgets, live tweeted. And then, the Cryto tax of 30%, the lack of bonus stripping any further and other strange things in the budget.
What category is this article in?
Opinion
Who wrote this article?
CM Team, Capitalmind's research team.
When was this article published?
Published 1 February 2022.
How long does this article take to read?
3 min read
What topics does this article cover?
Budget
What does the "**Crypto Taxation!**" section say?
Virtual Digital Assets, when you sell or transfer them, will be taxed at 30% of profits. Few salient points:
What does the "No more bonus stripping!" section say?
We've spoken of bonus stripping in the past - legally, we could defer taxes and reduce them by buying bonus shares before the record date, and selling some of them for a "notional" loss after. This was allowed for shares, but has now been removed in the budget.

Budget 2022: The Big Thread on all things that will be super important today! #Budget2022

Note: no investment advice. Large attempts at humour, not always successful. You’ve been warned.

cc @capitalmind_in

— Deepak Shenoy (@deepakshenoy) February 1, 2022

We start with markets, of course. Here’s something to keep you occupied for the next 5 seconds: How markets reacted before, during and after budgets, since 2001: pic.twitter.com/4lTJFqxofd

— Deepak Shenoy (@deepakshenoy) February 1, 2022

India’s tax rates across the years (I’ve only looked at personal tax rates) pic.twitter.com/s5ryHsLMrc

— Deepak Shenoy (@deepakshenoy) February 1, 2022

Priorities: Productivity, Energy, Climate, Financing of investments.

IT,Social Infra, Clean Energy, Etc. We has EVERYTHING.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

CGTMSE to be revamped, given new funds. This is for 200,000 cr. for MSMEs. Huge deal if this is done right. Lots of promise, but lots of red tape also.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

Quality Mental health counselling - 23 mental health centers NIMHANS as nodal. Truly excellent initiative! Very needed.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

68% of defence capex for local manufacturing. From 61% this year. Defence R&D to be opened even for startups. Zomato might go to Siachen! (Last sentence not in budget ok)

— Deepak Shenoy (@deepakshenoy) February 1, 2022

Public investment is needed to bring in private investment. So, capex is 35% increased from 5.44 lakh cr to 7.50 lakh crores! $100 billion.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

Data centers to get infra status! This is good. For financing.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

If the tax system was a car, all FM has done so far is changed the colour of some nuts under hubcaps.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

Crypto Taxation!

Virtual Digital Assets, when you sell or transfer them, will be taxed at 30% of profits. Few salient points:

  • No costs allowed (you can’t take out costs of mining etc.)

  • Losses if any cannot be offset against losses on any other head

  • No carrying forward of losses

  • This is similar to Lottery wins - you can’t offset costs, or offset losses, or carry any losses forward

  • This doesn’t not make crypto legal, but taxes you on any gains

CRYPTO Tax is here! Virtual digital assets - any sale will be taxed at 30%. No expense allowed. No set off against other incomes including capital gains.

Rate of 1% > some threshold, for something also.

No one claps.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

Additionally, 1% TDS has to be cut on the selling value of each trade. We don’t know how this will pan out, but initially, expect exchanges to comply with this.

If TDS is cut, then the money is paid for your PAN, and you can use that to offset any tax (including on crypto or otherwise).

Crypto tax: All sales taxed at 30%. No deductions of brokerage etc. allowed. No set-off against any other losses allowed (Is this reading right: you can’t even set off losses in other crypto transactions) pic.twitter.com/MpwpvSPleA

— Deepak Shenoy (@deepakshenoy) February 1, 2022

That’s it for direct taxes? So no change of 80C, or anything else, looks like.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

Import duty cuts have screwed up capital goods manufacturing in India. So: phase out concessional rates removed slowly and 7.5% import duty introduced.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

No mention of capital gains removal of FPIs on bonds - means no inclusion of bonds this year into global indexes. As @latha_venkatesh says, good point to note what isn’t.

Bond yields hit 6.8%

— Deepak Shenoy (@deepakshenoy) February 1, 2022

No more bonus stripping!

We’ve spoken of bonus stripping in the past - legally, we could defer taxes and reduce them by buying bonus shares before the record date, and selling some of them for a “notional” loss after. This was allowed for shares, but has now been removed in the budget.

Bonus stripping is removed completely, even on shares. We have taken advantage of this at @capitalmind_in so many years - have to now say goodbye.

— Deepak Shenoy (@deepakshenoy) February 1, 2022

Our views, on a video

Tagged:Budget