Please can you explain on Bonsu Stripping .
Give a example
Also explain on the provision.
This is because i am confused.
My understanding is as follows
Bonus stripping happens when bonus shares purchased are sold ex bonus. The cost of bonus share is nil. If held for more than 1 year, capital gain tax is exempt and if held for less than 1 year capital gain is chargeable at 15%.
Bonus stripping is not allowed for Mutual Funds
You know that cost of Bonus share is taken at Nil.
Cum-Bonus Shares are purchased. Say 100 Shares Purchased for Rs 5000.
On record date 100 Bonus shares have been issued. (1for 1) Cost Nil
Now the person is having 200 shares.
He sales Original Shares (FIFO method) say -for Rs 3000. (As the price of share come down when it becomes ex-bonus)
He Calculates capital Loss as under-
Sales Consideration 3000
Less: Cost of Acquisition 5000
Net STCL = -2000
He is not entitled to claim such STCL. However Rs. 2000 can be shown as cost towards bonus shares.
Purchase date : Within 3 months before the record date
Sale Date : Within 9 months from the Record date.
.
Paras Bafna sir - for bonus stripping, if shares were purchased 3 months + 1 day, before record date, would any of these provisions apply?
The conditions prescribed U/s 94(7) are cummulative in nature and as such if any of the condition is not met by the assessee, section doesn't apply to him.
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