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Confused about my holding after bonus shares: 100 shares of Motilal Oswal Financial Services

Milind Vadjikar |683 Answers |Ask -Follow

Insurance, Stocks, MF, PF Expert - Answered on Sep 06, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more

Question by Deepak on Sep 01, 2024Hindi

I had 100 shares of Motilal Oswal Financial Services as on June 1, 2024. They announced 3:1 bonus issue with a record date of June 10, 2024. How should I treat my share holding for Capital Gains purpose at the time of selling these shares in part lots : a.100 shares @ the original share purchase rate and 300 shares at NIL rate? b. 400 shares each @ 1/4th of the original purchase price? Need clarification in this regard.

Ans: Option a. As mentioned in your question is the way how it would be looked at, from capital gain tax perspective (100 shares at original price & date of purchase & 300 shares at zero price with date of allotment as reference for determining LT or STCG)

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I have to sell some shares of a particular large company, originally purchased in 1970 and thereafter getting increased through Bonus Shares in different proportions till last in Aug 2016. Meanwhile the company has also changed its face value from Rs 10 to Rs 1 per share in 2003-2005 or so, and thus increasing the no. of shares. Now I only know about the total nos of shares I have presently. My query is: 1. How to calculate its purchase cost, capital gains and taxable income? 2. Is LTCG rule for Grandfathering applies in this case also by taking FMV on 31.1.2018 of this share? 3. If I want to sell partially does FIFO rule to be taken for calculating capital gains apply? 4. What will be the taxation process (better if it can be illustrated by example with dates as above for better understanding) and to be shown under which schedule & in which ITR form no. Please enlighten me about the same as utter confusion is there.

Ans: I understand that you have sold listed shares and all corporate actions took place before 31st January 2018, hence capital gain earned after such date will be taxable.

For example: Today you hold 100,000 shares of that company, FMV as on 31st January 2018 is Rs 200 and today if you transfer 10,000 shares through recognised stock exchange at shares Rs 300, Capital gain of Rs 10,00,000 will be taxable on FIFO basis.

You have to show such gain in 112A schedule (acquired before 31st January 2018) under the Schedule CG.

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