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What are bonus shares?

April 26, 2017Bonus Shares

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What are bonus shares?

2 Answers

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When a company distributes shares to its share holders free of cost by capitalisation of resources, such shares are called “bonus shares”.

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NOTEWORTHY POINTS: 1. The share of bonus shares soes not constitute a source of income to the company or the financial position of the company remains the same. 2. Issue of bonus shares is not for sistribution of profits among the shareholders and hence not for income tax purpose. 3. Are not a gift. 4. The issue of bonus share does not improve the well being or financial position of the shareholders even though no cash is paid by them to acwire these shares…