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How to make tax gains on stock market losses

October 23, 2008

Tax implications of bonus issue

Bonus shares are shares issued by a company to its existing shareholders without any consideration.

Such shares are issued to increase the liquidity of a stock, or to adjust its market price resulting by a reduction in the accumulated profits and an increased share capital.

There is no liability on purchase, no tax liability on dividends received; however, on sale they attract short term or long term capital gains depending on the period of holding (date of allotment of bonus shares to date of sale).

The tax implications are the same as in the case of rights shares except that the cost of acquisition in the case of bonus shares will be taken to be nil.

Tax implications of a stock split ...

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