The purchase cost for bonus shares would be considered nil and the date of the acquisition would be the date of allotment of the bonus shares. You can not average out the cost with the original shares. The capital gain would be short term (10% tax) if the said bonus shares are sold within one year from the date of issue of bonus shares and if the sale happens after one year, the capital gain would be long term (tax exempt).

In the case of amalgamation, when the new shares received are sold, cost of the original shares will be considered for determining the capital gains.

In a demerger, shares of one or more new companies are issued. As a business is carved out from the original company, the cost of original shares is bifurcated in a ratio which is provided to the shareholders on issue of new shares.

Bonus or dividend, don’t forget tax in the end
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Source: The Economic Times

How are the markets looking? Ramesh Damani gives his views on stocks, sectors and investment strategies in a chat with investors.

Damani’s view on stocks and sectors

Chat with Ramesh Damani on 27 Nov, 2007
What’s good investment now?
How are the markets looking?
Click here for the full chat transcript.
Source: Moneycontrol.com

Chat with Ramesh Damani on 20 Nov, 2007
What’s good investment now?
How are the markets looking?
Click here for the full chat transcript.
Source: Moneycontrol.com

Chat with Ramesh Damani on 13 Nov, 2007
What’s good investment now?
How are the markets looking?
Click here for the full chat transcript.
Source: Moneycontrol.com

Chat with Ramesh Damani on 06 Nov, 2007
What’s good investment now?
How are the markets looking?
Click here for the full chat transcript.
Source: Moneycontrol.com