capital Tax on Bonus shares

anilsharjah · #11 11th July 2006, 12:05 PM

Dear Ashish , Pankaj ,

Thanks for such detailed replay

I illustrate my case in more detail

I purchased 350 shares of Dabur @ 210
Now I have 700 shares (After bonus) and CMP is about 142
As your advise the capital gain will be for 350 shares = (350*210) –(350*142) = 23800 loss.
So no capital gain

If I am selling another 350 shares after one year any capital gain will arise.

Thanks in advance

Anil Kumar

pkjha30 · #12 11th July 2006, 01:52 PM

Quote:

Originally Posted by anilsharjah

Dear Ashish , Pankaj ,

Thanks for such detailed replay

I illustrate my case in more detail

I purchased 350 shares of Dabur @ 210
Now I have 700 shares (After bonus) and CMP is about 142
As your advise the capital gain will be for 350 shares = (350*210) –(350*142) = 23800 loss.
So no capital gain

If I am selling another 350 shares after one year any capital gain will arise.

Thanks in advance

Anil Kumar

Hi Anil

I would first refer you to this page. Still you have some doubt do ask me unless you are planning to hire a lawyer or CA to dispute the contention of the IT dept and add to your further loss.

http://incometaxindia.gov.in/publica...s/Chapter2.asp

STC loss can be set off against STC Gain for next three years(Check this)
and LTC loss can be set off against LTC gain for next three years.

Cost of acquisition of bonus shares will be nil.
There will be no capital gains tax on your sale of bonus shares after one year if it is through stock exchanges and STT is paid.

Pankaj

aca_trader · #13 11th July 2006, 03:34 PM

Quote:

Originally Posted by pkjha30

Still you have some doubt do ask me unless you are planning to hire a lawyer or CA to dispute the contention of the IT dept and add to your further loss.

Pankaj

And the day any of the traders start making millions, hire a professional to see how tax liability can be reduced legally. There is much more to practice of Income Tax than Departmental guidelines and websites. Never forget the departmental guidelines and the interpretations of tax authorities are suited to the interests of Taxmen and not the assessee.

Best Regards,
--Ashish

aca_trader · #14 11th July 2006, 03:37 PM

Quote:

Originally Posted by anilsharjah

Dear Ashish , Pankaj ,

Thanks for such detailed replay

I illustrate my case in more detail

I purchased 350 shares of Dabur @ 210
Now I have 700 shares (After bonus) and CMP is about 142
As your advise the capital gain will be for 350 shares = (350*210) –(350*142) = 23800 loss.
So no capital gain

If I am selling another 350 shares after one year any capital gain will arise.

Thanks in advance

Anil Kumar

If your are adopting the FIFO method as inherent in your question then next year your cost of bonus shares will be NIL and thus the entire consideration received will be taxable.

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