Bonus Shares

TARUN JAIN (Querist) 14 August 2009 This query is : Resolved
A private limited company who is making profits since incorporation, has not declared any dividend.

Now, the Company wants to issue bonus shares using credit balance lying in Profit & Loss Account.

Can the Company do so?

If Yes, please explain the tax implication also.

Thanks & Regards

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Vineet (Expert) 13 December 2009
Why not.

There is no income tax implication as company is capitalising its accumulated profits and it will not amount to distribution of profits.

There may be stamp duty liability depending upon the existing authorised capital and proposed paid up capital post bonus issue.

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