What is the bonus share ? Record date, Eligibility

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.

OPEN ACCOUNT

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

Record date:-

Company announce a date before for a bonus. If anyone buys or own shares of the company on this date he is eligible for the bonus. this date called the Record date of bonus share.

Why company announce bonus share:-

Large and profitable company announce bonus share. The company distributed our profit to shareholders in the form of bonus shares. The ratio of bonus share depends on the company and its profit.

Small and new companies newer announce any bonus. Because they use to profit in the company development.

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

Wipro bonus history

Questions and Answer about bonus issue

Q.1 What do you mean by bonus share?

Ans. Bonus share is a free stock company give to a shareholder.

Q.2 What is the benefit of bonus share?

Ans. In bonus, the Shareholder receives a free share(stock) of a company.

Q.3 How is bonus share calculated?

Ans. Bonus share calculates in Ratio (ex. 1:1,2:1,2:5).

Q.4 How do I claim bonus share?

Ans. You are a shareholder of the company on the record date.

Q.5 Bonus shares are issued to?