Tax on Bonus Shares/Rights Shares/ESOP
Short-term capital assets
[Section 48]
Full value of consideration
Less: Cost of acquisition of asset
Less: Cost of improvement
Less: Expenditure incurred wholly and
exclusively in connection with such
transfer
Long-term capital assets
[Section 48]
Full value of consideration
Less: Indexed Cost of acquisition
Less: Indexed Cost of Improvement
Less: Expenditure incurred wholly and
exclusively in connection with such
transfer
Indexed cost of acquisition and Indexed cost of improvement shall be computed with reference to
Cost Inflation Index (‘CII’)
[(Cost of Improvement)
× (CII for the year of
Indexed Cost of
transfer)]
Improvement =
CII for the year of
Improvement
[(Cost of Acquisition) ×
(CII for the year of
transfer)]
Indexed Cost of (CII for the year of
Acquisition = acquisition or for the
Financial Year 2001-02,
whichever is later)
Financial year Cost Inflation Index

2001-02 100
2002-03 105
2003-04 109
2004-05 113
2005-06 117
2006-07 122
2007-08 129
2008-09 137
2009-10 148
2010-11 167
2011-12 184
2012-13 200
2013-14 220
2014-15 240
2015-16 254
2016-17 264
2017-18 272
2018-19 280
2019-20 289
2020-21 301
2021-22 317
2022-23 331
 Concept of Bonus Shares

• Meaning and Concept

• Whether exempted from Taxation?-NO

• Who is liable to pay tax:- YOU (Not Company)

 Calculation of Tax

• Sale Value and Purchase Value

Before 31st Jan, 2018

• Cost of Acquisition: Closing Price on 31st Jan, 2018

After 31st Jan, 2018

• Cost of Acquisition: ZERO

• FIFO: First In First Out

 Concept of Rights Shares

• Concept: Offer to the existing shareholders to purchase additional shares at

discounted price.

• Concept of Renunciation:
Calculation of Capital Gain
Renunciation Happened from ‘A’ to ‘B’

For a Consideration

Calculation in case of Renunciation

(For ‘A’)
Calculation in case of Renunciation
(For ‘B’)
 Taxation on ESOP

• Concept:

• Day of Offer

• Vesting Period

• Date of Vesting

• Exercise Period

• Date of Exercise

• Date of Allotment
 Dual Taxation

a. Taxable as Perquisite
b. Taxable as Capital Gain

Taxable as Perquisite

• Offer Price and Price on Date of Exercise

• Taxable as ‘Salary’
 Taxable as Capital Gain

• Cost of Acquisition: Market value as on Date of Exercise