Capital gain on bonus shares

Tax queries 3227 views 4 replies

Dhaval

Job

794 Points Joined December 2009

Suppose a person has purchased 500 shares of A Ltd(listed) on 10th April for Rs. 800 per share. On 15th May company issued bonus shares in the ratio of 1:1 so he got 500 shares at nil cost. Suppose on that day shares price is Rs 425 per share, ex-bonus. On 5th June he sold 1st 500 shares and on that day market price was Rs. 450 per share. And, in calculating CG on sale of shares FIFO method is used.

Now my query is what cost should be taken for calculation of capital gain on sale of 1st 500 shares (i.e 800 or other) and whether it will be short term capital gain or loss.

Thanks.

Replies (4)

manoj chhaparia

21 Points Joined July 2013

25000 ka. cg hoga.

Gowtham

Student CA IPC / IPCC

119 Points Joined July 2013

1st case 500*800=400000

2nd case500*0=000000

Total =400000/1000shares =400pershare

so here 500* 450=225000 sale

SCG = 225000-200000=25000

Tax @ 15% = 25000*15%=3750

Dhaval

Job

794 Points Joined December 2009

Dear Gowtham,

Kindly also give statutory provision of this solution or any rule or circular or notification.

Harsha

Software professional

214 Points Joined May 2011

Bonus shares are deemed to be acquired at zero cost on the issue date. So till one year, you have to take the sale price (minus taxes) itself as CG for them ( bonus shares)

The original shares would retain the purchase price for all CG calculations

https://incometaxbangalore.in/incometaxbangalore/faq/cgains.htm#Q4 is an official information.