Bonus Issue
A bonus issue is a free allotment of additional shares to existing shareholders in a fixed ratio (for example 1:1 — one new share for every share held), made by capitalising the company's accumulated reserves. It increases the share count without changing the value of the business.
Mechanically, a bonus converts reserves on the balance sheet into share capital. Nothing about the business changes: revenue, profit and the value of your holding are the same the day after — you simply hold more shares at a proportionately lower price. A 1:1 bonus roughly halves the share price on the ex-date because the same company is now divided into twice as many shares.
Companies issue bonuses to improve liquidity and make the per-share price more accessible to retail investors, and as a signal that reserves are healthy and management is comfortable servicing a larger equity base with future dividends. In India the board announces the bonus with a ratio and record date; under SEBI's streamlined timeline, bonus shares are credited and available to trade within about two working days of the record date.
Watch two things: eligibility (you must own the shares before the ex-date to receive the bonus) and the tax cost basis — bonus shares have a cost of zero with a fresh acquisition date, which affects capital-gains calculations when you eventually sell.
In practice
Goodluck India allotted 6.64 crore bonus shares in a 2:1 ratio after a 21 August 2026 record date, capitalising ₹13.29 crore from its securities premium account. Its share count rose from 3.32 crore to 9.97 crore, with the new shares tradable from 25 August 2026. Read the filing (24 Aug 2026) →
Common questions
Is a bonus issue taxable in India?
Receiving bonus shares is not taxed. Tax arises only when you sell them, and because they carry no cost, the whole sale price counts as a capital gain. Listed bonus shares held for more than 12 months from allotment attract long-term tax of 12.5% on gains above ₹1.25 lakh a year; sold sooner, the gain is taxed at 20% as short-term.
What is bonus stripping?
It is an anti-avoidance rule in the income-tax law. If you buy shares within three months before a bonus record date and sell the original shares within nine months after it, any loss on that sale is disallowed and instead added to the cost of the bonus shares you still hold. The 2022 Budget extended the rule from mutual-fund units to shares.
Do I get a dividend on bonus shares?
Yes, for any dividend whose record date falls after the bonus shares are credited, because bonus shares rank equally with existing shares. Since the share count has grown, the dividend per share after a bonus is often lower than before, even when the total amount the company pays out is the same or higher.
What is the difference between a 1:1 and a 2:1 bonus?
The first number is the bonus shares you receive and the second is the shares you must already hold. A 1:1 bonus gives one new share for each share held and doubles your share count; a 2:1 bonus gives two for each and triples it. On the ex-date the price adjusts to roughly a half and a third of the previous close respectively.
How stocks tend to react
Bonus announcements are often received positively — they are read as a confidence signal and tend to attract retail interest around the record date. But because a bonus changes nothing fundamental, any pop is sentiment-driven; over longer horizons the stock trades on earnings, not on how many pieces the equity is cut into.
MarketPing measures this instead of guessing: every analysed announcement carries the stock's actual price reaction across 14 horizons, and the Reaction Lab aggregates how each category of announcement has historically moved stocks.
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Stock splits & bonuses on Discover → — the NSE and BSE companies that filed one recently, each with its filing and the measured price reaction.
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Educational content, not investment advice. Regulations and tax rules change — verify current rules before acting.