Taxation of Bonus shares and Stock split

Taxation of Bonus shares and Stock split There are 2 types of Capital Gain taxes , 1) LTCG is Long Term Capital Gain 2) STCG is Short Term Capital Gain LTCG is listed securities like shares , debentures ,bonds, etc in a recognized stock exchange sold holding more than 12 months is nil on the profits upto Rs 1 lakh and beyond Rs 1 lakh profit its 10% without indexation benefit. STCG is same listed securities in a recognized stock exchange sold holding less than 12 months is 15% on the profit. Holding period may vary for unlisted shares s 24 months and unlisted securities other than shares s 36 months. BONUS SHARES are shares allotted for free to the shareholders and the shareholders dont pay anything to buy these shares and your capital increases. For example if a person buys 100 shares of company on 1/8/2019 t Rs 100 each and on 5/2/2020 the company allots bonus shares in the ratio 1:1 so the total shares 100+100 is 200. On 2/9/2020 he sells all 200 shares at Rs 120 each. LTCG on sale of original 100 shares which was bought more than 12 months (1/8/2019). Cost price 100*100=Rs 10,000 Selling Price 100*120=Rs 12,000 Capital Gains =Rs 2,000 LTCG 10% = Rs 200 STCG on sale of 100 bonus shares which was allotted less than 12 months (5/2/2020) Cost Price 100*0= Rs 0 Selling Price 100*120= Rs 12,000 Capital Gains = Rs 12,000 STCG 15% = Rs 1,800 So total tax LTCG is Rs 200 + STCG is Rs 1,800 = Rs 2,000 Here in Bonus shares company investment made Rs 10,000 and sold for Rs 24,000 , profit before tax is Rs 14,000, taxes paid Rs 2,000. STOCK SPLIT is the same stock split into more shares where your capital remains same. For example if a person buys 100 shares of a company on 1/8/2019 at Rs 100 each. On 5/2/2020 the company announces shares split in the ratio 1:1 , so total shares will be 100+100=200 but the stock price on the day was Rs 110 each will be divided by 2 where the stock will become Rs 55 each. On 2/9/2020 he sells all 200 shares at Rs 60 each. LTCG on sale of 200 shares Cost price 100*100 = Rs 10,000 Selling price 200*60 = Rs 12,000 Capital Gains =Rs 2,000 LTCG 10% = Rs 200. Here in Stock split company investment Rs 10,000 and sold for Rs12,000, profits Rs 2,000 and taxes paid Rs 200

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