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Capital Gain Calculation for Bonus Shares

edited March 2013 in General
My problem

200 shares of TCS- purchased on 05/03/07 for Rs.232770=00
200 shares of TCS – bonus received on 19/06/09
Total 400 shares of TCS sold on 03/11/09 for Rs. 249380=00
My long term gain on transaction of TCS shares- Rs.16610=00 (completely tax-free)

On transaction of purchase and sale of TCS shares , Mprofit capital gains report shows-
Long term capital loss Rs.108080=00 
Shortterm capital gains 124690=00 
As per this I have to pay 15% tax on short term capital gains, i.e Rs.18703.50 !
(And capital loss cannot be booked in this case as bonus stripping cannot be done if sale of shares made within 9 months of bonus allotment.) 

Please explain the contradiction, and advice me on what and how to do this entries in MProfit


  • Please note that your entries in MProfit are correct. The reports generated in MProfit are as per the income tax rules. Please note that the purchase value of bonus shares is considered as zero value and when you sell your bonus shares and the capital gain will be treated as short term if the bonus shares are sold within one year of receipt of bonus shares and long term if the bonus shares are sold after one year.

    Both the original shares and bonus shares are treated separately for calculating capital gains. In your case, the bonus shares are received on 19-Jun-09 and sold on 03-Nov-2009, hence are sold within one year and hence you see the short term capital gain on TCS on bonus shares.

    I can see that in your situation, you have to pay more short term tax because of the bonus shares, which seems higher than your actual gain from TCS. You can carry forward the long term loss for some years which can be set off against long term gain in future. I would suggest that you take the opinion of your chartered accountant and he is the right qualified person to give you perfect advice in this matter and provide some solution for this situation.
  • I am not a professional nor well versed with this topic. But from my limited knowledge I say that as per present law there is no tax on LT Cap Gains. So there is no benefit to carry over LT loses as mentioned in last para of the above reply of March 13. If the writer means, if in future LT Cap Gains are taxed and in future the tax payer can get advantage, then it is OK. Any knowledgeable person please explain the issue of carrying forward of LT Capital Loss.
  • It is really a good question. This is very well explained by Gautam Nayak, the chartered accountant in one of the articles on

    The article describes the treatment on both, the loss on short term and long term capital gains. As per the author, the long term capital loss can be set off against the future long term capital gain arising out of off-market sale.

    Click here for the article:
    Tax treatment of losses on sale of shares

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