Income Tax on Bonus Shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2010 I had Unitech share cert no. 19763 for 100 equity shares having face value of Rs. 10/- each on 1.7.1990 ( transfer Caswe)and the said shares demated by me on .19.06.2006

100 shares of face value of Rs. 10/- each were subdivided to face value Rs. 2/- each on 1st July 2006, 500 shares of face value of 2/- each were credited to my demat account No. 41185123 against my holding of 100 share of face value of Rs. 10/- each as on record date i.e. 30.06.2006.
2. 6000 shares were allotted as Bonus shares to me on 1st July, 2006 in the ratio of 12:1 and credit of which was given to my demat account in the 2nd week of July, 2006. After 2 months I sold all the shares. What will be my Tax liability?
Kindly help me out, here I am not able to get clear answer. My case is in appeal. Kindly take it seriously.

MK GUPTA (Chartered Accountant

MK GUPTA (Chartered Accountant (Expert)
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25 May 2010 DEAR ANJANA

YOUR TAX LIABILITY WOULD BE ON THE DIFF BETWEEN

SALE PROCEEDS OF THE SHARES
LESS INDEXED COT OF THE ACQUISITION
CAPITAL GAINS

COST INCURRED FOR THE BONUS SHARES IS NIL, SO ITS COST IS ASSUMED AS NIL.

Rasesh

Rasesh (Expert)
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25 May 2010 Agree with Expert. The entire consideration on the bonus shares (6000 shares) would be short term capital gain and has to be taxed accordingly.

Whereas on the original shares (500 shares of Rs. 2 FV), the consideration would be long term capital gain and exempt from any tax.