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Bonus shares – Cost of Acquisition and Taxability



Cost of acquisition of any additional financial assets as bonus shares or security or otherwise which is received without any payment by the assessee on the basis of his holding any financial asset shall be taken to be NIL.

If original shares and bonus shares are acquired before April 1, 1981

Cost of acquisition of original shares – Actual cost or Fair market value on April 1, 1981, whichever is more.

Cost of acquisition of bonus shares – Fair market value on April 1, 1981.

If original shares are acquired before April 1, 1981 but bonus shares are allotted after April 1, 1981

Cost of acquisition of original shares – Actual cost or Fair market value on April 1, 1981, whichever is more.

Cost of acquisition of bonus shares – Nil

If original shares and bonus shares are acquired after April 1, 1981

Cost of acquisition of original shares – Actual cost

Cost of acquisition of bonus shares – Nil

Moreover, in the case of a capital asset being a share, security or unit which is allotted without any payment on the basis of holding of any other financial asset, the period for treating such share, security or unit as a short term capital asset shall be calculated from the date of allotment of such share, security or unit as the case may be.

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Alok Patnia founded Taxmantra.com, an expert in tax advisory & compliance. He is a Chartered Accountant having prior exposure with Ernst & Young & KPMG.

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