Enter your shares held, your average buy price and the bonus ratio. This bonus share calculator shows your new share count, your diluted average price for tracking, and the separate tax cost that applies when you sell.
Bonus Share Calculator
For a standard bonus issue, such as 1:1 or 1:2. Ratio is new shares for every X held.
This average price is for your own portfolio tracking only. For capital gains tax, bonus shares have a separate rule below.
Your holding in detail
| Item | Value |
|---|
Illustrative calculation. Does not include brokerage or charges, and is not tax advice.
A company announces a 1:2 bonus, and 100 shares become 150 overnight, at no extra cost. Your portfolio value does not actually change, since the price adjusts down to match. A bonus share calculator shows the new count and the new average, plus a tax rule that trips up most investors.
How do you use this bonus share calculator in 3 steps?
- Enter the shares you hold and your average buy price.
- Enter the bonus ratio, as new shares for every X you hold, such as 1 for every 2.
- Add the market price before the bonus if you want the theoretical ex-bonus price, then read the new average and the tax notes.
Stock Charcha’s bonus share calculator separates two numbers that often get mixed up: the average price you track for yourself, and the cost the Income Tax Department recognises when you sell.
How does the bonus share calculator work out the new average price?
A bonus issue does not cost you anything, so your total investment stays exactly the same. It is simply spread across more shares.
Bonus shares = Shares held × (New shares ÷ Shares required), rounded down
New average price = Total amount invested ÷ Total shares after the bonus
This diluted average is useful for tracking your own profit and loss on the screen, but Stock Charcha keeps it separate from the figure the tax rules actually use, which is the next section.
What does a worked example look like?
Take 100 shares bought at ₹500, with a 1:2 bonus. These figures are illustrative.
| Item | Value |
|---|---|
| Bonus shares received | 50 |
| Total shares after the bonus | 150 |
| Total amount invested | ₹50,000 (unchanged) |
| New average price | ₹333.33 |
| Theoretical ex-bonus price (market was ₹500) | ₹333.33 |
Notice the ex-bonus price and the new average land on the same number here, because the market price and your buy price happened to be equal. That will not always be true.
How does the bonus ratio change the outcome?
Here is the same 100 shares at ₹500 under different common ratios.
| Ratio | Bonus shares | Total shares | New average price |
|---|---|---|---|
| 1:1 | 100 | 200 | ₹250.00 |
| 1:2 | 50 | 150 | ₹333.33 |
| 2:1 | 200 | 300 | ₹166.67 |
| 1:3 | 33 | 133 | ₹375.94 |
| 3:1 | 300 | 400 | ₹125.00 |
A bigger ratio dilutes the average price further, but your total investment and the value of your holding do not change on the day of the bonus. Only the number of pieces it is cut into changes, which the bonus share calculator shows clearly across ratios.
Why does the cost of bonus shares matter at tax time?
This is the part a diluted average price hides. For capital gains tax, the cost of acquisition of bonus shares is treated as Nil under Section 55(2)(aa) of the Income Tax Act, not the diluted average shown above. Your original shares keep their original cost. The two lots are taxed separately.
The holding period for bonus shares also starts fresh from the date of allotment, not from when you bought the original shares. Sell both lots together and part of the gain can be short-term while the rest is long-term, depending on how long each lot was actually held.
| Lot | Cost of acquisition (tax) | Holding period starts |
|---|---|---|
| Original shares | What you actually paid | Date you bought them |
| Bonus shares | Nil (or FMV on 1 Apr 2001 if issued earlier) | Date of bonus allotment |
Because the cost is Nil, the entire sale price of a bonus share becomes the taxable gain. Confirm the current position on the Income Tax Department website before you file, since this is a legal provision, not an estimate this calculator can adjust for you.
What does this bonus share calculator leave out?
It does not include brokerage or charges on any later sale, which our brokerage calculator covers. It also does not account for anti-bonus-stripping rules, which can disallow a loss booked by selling original shares shortly after a bonus. For tax on the eventual sale, use the share capital gains tax calculator.
This is an estimate, not tax advice. Investments in the securities market are subject to market risks. Read all related documents carefully before investing.
Where should you go after using the bonus share calculator?
To track your overall cost across several purchases, see the stock average calculator. When you eventually sell, the share capital gains tax calculator totals STCG and LTCG tax across lots.
The Investing section of the Charcha Knowledge Hub has more. Run the Stock Charcha bonus share calculator the next time a company you hold announces one, and keep the two lots separate in your own records.
Related calculators
- Stock average calculator
- Share capital gains tax calculator
- Stock profit and loss calculator
- Brokerage calculator
Last updated: 3 October 2026. Tax rule checked on 3 October 2026 (Income Tax Act Section 55(2)(aa), as confirmed by tribunal rulings and several tax-practitioner sources). Review if the provision is amended.
Founder of Stock Charcha. Stock market enthusiast, actively investing since November 2022. About the author
Educational content only. This page is not personalised financial or tax advice, and nothing here is a recommendation to buy or sell any stock. Please do your own research or speak to a SEBI-registered adviser or a chartered accountant, and read our disclaimer.
Frequently asked questions
Do I pay tax when I receive bonus shares?
No. There is no tax at the time of allotment, since a bonus issue is a capitalisation of the company’s own reserves, not income paid to you. Tax applies only when you eventually sell the shares, on the gain at that time.
What is the cost of acquisition for bonus shares?
It is treated as Nil under Section 55(2)(aa) of the Income Tax Act, for bonus shares issued on or after 1 April 2001. If the bonus was issued before that date, the fair market value as on 1 April 2001 is used instead.
Does the holding period of bonus shares start from when I bought the original shares?
No. It starts fresh from the date the bonus shares were allotted to you, not from your original purchase date. Original shares and bonus shares are tracked as two separate lots for tax purposes.
Why does my average price fall after a bonus, even though I paid nothing extra?
Because the bonus share calculator spreads your same total investment across more shares. Your total cost in rupees has not changed, only the number of shares it is divided by, which lowers the average price per share.
What is anti-bonus-stripping, and does it affect me?
It is a rule, Section 94(8), aimed at investors who buy shares just before a bonus, then sell the original shares at a loss once the price drops post-bonus, to claim an artificial tax loss. It can disallow that loss in certain circumstances, so check with a chartered accountant if this applies to you.