Are bonus shares allotted taxable in the hands of shareholders?

Hello Roopa,

There won’t be any immediate tax consequence when receiving the bonus shares since shares won’t be included as part of the recipients taxable income. However the recipient may incur capital gains tax when the bonus shares are later sold.
Note: Because of higher tax implication in case of short term capital gains on bonus shares, it’s advisable to sell them post one year holding period. Tax liability becomes zero on long term capital gains provided it is sold through a stock exchange and Securities Transactions Tax is paid on this sale transaction.

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