Originally posted by investor
According to the IT rules, i think for bonus we can treat the "bonus" shares
as having zero cost of acquisition, while for the split shares it would the
original cost divided by the appropritae split ration....im not sure though.
It would help a lot of us if you can clear this once and for all.
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I think there's a small point to be noted here.
-->Incase of a bonus of say 1:1, I recieve the new share at
zero cost. Now, suppose I had initially bought 10 shares at Rs 100 each. Say at the time of the bonus, its price is Rs 120. After bouns the price becomes half to 60. Now if I sell 10 shares@60, and if I have held the share for less than 1 year, then it is a
short term capital loss for me and I can balance this against any
short term capital gains that I might have made. This will help me reduce the tax that I pay
legally.
The same is not true for split shares.
--> Another difference is that the bonus shares are acquired on the date on which they are
issued.
The split shares are assets that are acquired from the date you acquire the original shares.
However, I personally feel that the above should not be used to base buying/selling decisions. These should however be kept in mind while filing tax returns.
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