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Budget 2018: Govt to plug loopholes; Bonus Stripping could come under taxman lens

Bonus stripping is a term used to structure a transaction of purchase and sale of shares of a listed company, which generates short-term loss which is set off against some other capital gains.

January 30, 2018 / 09:14 IST
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As we enter the Budget week speculation about Long Term Capital Gains tax (LTCG) or plugging the loophole around ‘Bonus Stripping’ becomes louder. Tax systems are complex and to keep it simple it leaves behind few opportunities, and if the government can plug this loophole, it could garner close to Rs15000-20000 crore in additional revenues, say experts.

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To start with – what is bonus stripping and why has it become the talk of the town?

Bonus stripping is a term used to structure a transaction of purchase and sale of shares of a listed company, which generates short-term loss which is set off against some other capital gains.