In this post, we describe what is the bonus share. why companies announce bonus share and tax on bonus.
What is the bonus share?
Bonus share:-
Bonus share is free shares divided by a company into shareholders. The stock transfer in the shareholder Demat account by the company.
Companies announce bonus in ratio. Ex.a shareholder buys 10 stocks of a company after some time company announce 2:1 bonus, then shareholders receive 2 stock on every 1 stock. So, he receives 20 stocks. Now the total share in his Demat account 20+10=30 stocks.
If the company announce a 1:2 bonus, then shareholders receive 1 stock on 2 stock they held. So, he receives 5 stocks. Now the total share in his Demat account 5+10=15 stocks.
Eligibility for bonus share
Why company announce bonus share:-
Tax on bonus share
The government does not apply any charge on bonus.
Conclusion
Bonus share is a free gift to shareholder given by the company. Before invest in a company check the company bonus history and its financial conditions. As an investor check companies bonus announcement and record date. Find you are eligible for the bonus.
Best companies bonus history
Questions and Answer about bonus issue
