{"id":15705,"date":"2026-08-11T15:58:21","date_gmt":"2026-08-11T10:28:21","guid":{"rendered":"https:\/\/lakshmishree.com\/blog\/?p=15705"},"modified":"2026-08-11T15:58:24","modified_gmt":"2026-08-11T10:28:24","slug":"bonus-share-vs-stock-split","status":"publish","type":"post","link":"https:\/\/lakshmishree.com\/blog\/bonus-share-vs-stock-split\/","title":{"rendered":"Bonus Share vs Stock Split: Key Differences, Examples &amp; Investor Guide"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">When talking about <strong>bonus share vs stock split<\/strong>, many investors think both corporate actions are the same because it increases the number of shares they own.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, they work differently and have different effects on a company's financial statements. Understanding these differences can help you interpret corporate announcements and make informed investment decisions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this guide, you'll learn how bonus shares and stock splits work, their key differences, and what they mean for <a href=\"https:\/\/www.investopedia.com\/terms\/s\/shareholder.asp#:~:text=Key%20Takeaways,if%20the%20company%20pays%20them.\" target=\"_blank\" rel=\"noopener\">shareholders<\/a> through simple explanations and practical examples.<\/p>\n\n\n\n<h2 id=\"key-takeaways\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-f2958351843c19f3426a18a2a8b0791b\"><strong>Key Takeaways<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Bonus Shares - <\/strong>Bonus shares are additional shares issued free of cost to existing shareholders by converting a company's reserves into share capital.<\/li>\n\n\n\n<li><strong>Stock Split - <\/strong>A stock split increases the number of shares by reducing their face value. It does not change the company's overall share capital.<\/li>\n\n\n\n<li><strong>Bonus Share vs Stock Split - <\/strong>Both corporate actions increase the number of shares you own. However, they do not immediately increase the total value of your investment.<\/li>\n\n\n\n<li><strong>Why Companies Do It - <\/strong>Companies issue bonus shares to reward shareholders, while stock splits are mainly used to improve affordability and trading liquidity.<\/li>\n\n\n\n<li><strong>What Investors Should Know - <\/strong>Don't judge a company based only on a bonus issue or stock split. Its financial performance and future growth matter far more.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-rank-math-toc-block\" id=\"rank-math-toc\"><h2>Table of Content<\/h2><nav><ul><li class=\"\"><a href=\"#what-are-bonus-shares\">What Are Bonus Shares?<\/a><ul><\/ul><\/li><li class=\"\"><a href=\"#what-is-a-stock-split\">What Is a Stock Split?<\/a><ul><\/ul><\/li><li class=\"\"><a href=\"#common-misconceptions\">Common Misconceptions<\/a><\/li><li class=\"\"><a href=\"#bonus-share-vs-stock-split-quick-comparison\">Bonus Share vs Stock Split: Quick Comparison<\/a><\/li><li class=\"\"><a href=\"#similarities-between-bonus-shares-and-stock-split\">Similarities Between Bonus Shares and Stock Split<\/a><\/li><li class=\"\"><a href=\"#benefits-of-bonus-shares\">Benefits of Bonus Shares<\/a><\/li><li class=\"\"><a href=\"#benefits-of-stock-split\">Benefits of Stock Split<\/a><\/li><li class=\"\"><a href=\"#tax-implications-of-bonus-shares-vs-stock-split\">Tax Implications of Bonus Shares vs Stock Split<\/a><ul><\/ul><\/li><li class=\"\"><a href=\"#does-a-bonus-issue-or-stock-split-increase-wealth\">Does a Bonus Issue or Stock Split Increase Wealth?<\/a><\/li><li class=\"\"><a href=\"#conclusion\">Conclusion<\/a><\/li><li class=\"\"><a href=\"#frequently-asked-questions\">Frequently Asked Questions<\/a><ul><\/ul><\/li><\/ul><\/nav><\/div>\n\n\n\n<h2 id=\"what-are-bonus-shares\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-2cde301cbcd0f8a5a97501a59c007586\"><strong>What Are Bonus Shares?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Bonus shares are <strong>additional shares that a company gives to its existing shareholders free of cost<\/strong>. Instead of paying cash <a href=\"https:\/\/lakshmishree.com\/blog\/what-is-dividend-in-stock-market\/\">dividends<\/a>, the company issues extra shares by converting a part of its accumulated reserves into share capital.<\/p>\n\n\n\n<h3 id=\"how-bonus-shares-work\" class=\"wp-block-heading\"><strong>How Bonus Shares Work<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A bonus issue follows a simple process:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The company announces a bonus ratio, such as 1:1 or 2:1.<\/li>\n\n\n\n<li>Eligible shareholders receive additional shares free of cost.<\/li>\n\n\n\n<li>The company converts a portion of its reserves into share capital.<\/li>\n\n\n\n<li>The total number of outstanding shares increases.<\/li>\n\n\n\n<li>The share price adjusts based on the bonus ratio.<\/li>\n\n\n\n<li>Shareholders' ownership percentage remains the same.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Although you receive more shares, your investment value generally remains unchanged immediately after the bonus issue because the share price adjusts accordingly.<\/p>\n\n\n\n<h3 id=\"bonus-share-example\" class=\"wp-block-heading\"><strong>Bonus Share Example<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Suppose you own <strong>100 shares<\/strong> of ABC Ltd., trading at <strong>\u20b9200 per share<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The company announces a <strong>1:1 bonus issue<\/strong>, meaning you'll receive one additional share for every share you already own.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Particulars<\/strong><\/td><td><strong>Before Bonus Issue<\/strong><\/td><td><strong>After 1:1 Bonus Issue<\/strong><\/td><\/tr><tr><td>Shares Held<\/td><td>100<\/td><td>200<\/td><\/tr><tr><td>Market Price per Share<\/td><td>\u20b9200<\/td><td>\u20b9100*<\/td><\/tr><tr><td>Total Investment Value<\/td><td>\u20b920,000<\/td><td>\u20b920,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><em>*Approximate adjusted price.<\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"539\" src=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Bonus-Share-1024x539.jpeg\" alt=\"Bonus Share vs Stock Split\" class=\"wp-image-15707\" srcset=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Bonus-Share-1024x539.jpeg 1024w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Bonus-Share-752x396.jpeg 752w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Bonus-Share-768x404.jpeg 768w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Bonus-Share-1536x808.jpeg 1536w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Bonus-Share-150x79.jpeg 150w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Bonus-Share.jpeg 1600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 id=\"what-is-a-stock-split\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-758ff31a1d6159b42b247da330ee156f\"><strong>What Is a Stock Split?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A stock split is a corporate action in which a company <strong>divides its existing shares into multiple shares by reducing their face value<\/strong>. Unlike a bonus issue, no reserves are converted into share capital.<\/p>\n\n\n\n<h3 id=\"how-a-stock-split-works\" class=\"wp-block-heading\"><strong>How a Stock Split Works<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Here's what happens during a stock split:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The company announces a stock split ratio, such as 2:1.<\/li>\n\n\n\n<li>The <a href=\"https:\/\/lakshmishree.com\/blog\/face-value-of-share\/\">face value<\/a> of each share is reduced.<\/li>\n\n\n\n<li>The number of outstanding shares increases proportionately.<\/li>\n\n\n\n<li>The company's share capital remains unchanged.<\/li>\n\n\n\n<li>The market price adjusts according to the split ratio.<\/li>\n\n\n\n<li>Shareholders continue to own the same percentage of the company.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Companies often announce stock splits after a significant rise in their share price to improve affordability and trading activity.<\/p>\n\n\n\n<h3 id=\"stock-split-example\" class=\"wp-block-heading\"><strong>Stock Split Example<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Suppose you own <strong>100 shares<\/strong> of XYZ Ltd.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Each share has:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Face value: <strong>\u20b910<\/strong><\/li>\n\n\n\n<li>Market price: <strong>\u20b9500<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The company announces a <strong>2-for-1 stock split<\/strong>, reducing the face value from <strong>\u20b910 to \u20b95<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Particulars<\/strong><\/td><td><strong>Before Stock Split<\/strong><\/td><td><strong>After 2-for-1 Stock Split<\/strong><\/td><\/tr><tr><td>Shares Held<\/td><td>100<\/td><td>200<\/td><\/tr><tr><td>Face Value<\/td><td>\u20b910<\/td><td>\u20b95<\/td><\/tr><tr><td>Market Price per Share<\/td><td>\u20b9500<\/td><td>\u20b9250*<\/td><\/tr><tr><td>Total Investment Value<\/td><td>\u20b950,000<\/td><td>\u20b950,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><em>*Approximate adjusted price.<\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"539\" src=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Stock-Split-1024x539.jpeg\" alt=\"Bonus Share vs Stock Split\" class=\"wp-image-15708\" srcset=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Stock-Split-1024x539.jpeg 1024w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Stock-Split-752x396.jpeg 752w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Stock-Split-768x404.jpeg 768w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Stock-Split-1536x808.jpeg 1536w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Stock-Split-150x79.jpeg 150w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Stock-Split.jpeg 1600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 id=\"common-misconceptions\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-dfbc9b15b6063aab248c9f10816a10ad\"><strong>Common Misconceptions<\/strong><\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Bonus Shares Are Free Money.<\/strong> You receive additional shares, but the market price adjusts accordingly.<\/li>\n\n\n\n<li><strong>A Stock Split Increases Company Value<\/strong>. A stock split changes the number of shares, not the company's overall value.<\/li>\n\n\n\n<li><strong>Both Increase Wealth Immediately. <\/strong>Neither action creates instant profits. Long-term returns depend on the company's future performance.<\/li>\n\n\n\n<li><strong>Bonus Shares Dilute Ownership.<\/strong> Since all eligible shareholders receive bonus shares in the same ratio, ownership percentages remain unchanged.<\/li>\n<\/ol>\n\n\n\n<h2 id=\"bonus-share-vs-stock-split-quick-comparison\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-8f3ca8a3abfc1cbfae259fee3b870679\"><strong>Bonus Share vs Stock Split: Quick Comparison<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Parameter<\/strong><\/td><td><strong>Bonus Shares<\/strong><\/td><td><strong>Stock Split<\/strong><\/td><\/tr><tr><td>Meaning<\/td><td>Free additional shares issued to existing shareholders<\/td><td>Existing shares are divided into more shares<\/td><\/tr><tr><td>Purpose<\/td><td>Reward shareholders and capitalize reserves<\/td><td>Reduce share price and improve affordability<\/td><\/tr><tr><td>Face Value<\/td><td>Remains the same<\/td><td>Reduces according to the split ratio<\/td><\/tr><tr><td>Number of Shares<\/td><td>Increases<\/td><td>Increases<\/td><\/tr><tr><td>Share Capital<\/td><td>Increases<\/td><td>Remains unchanged<\/td><\/tr><tr><td>Reserves<\/td><td>Decrease as they are converted into share capital<\/td><td>No impact<\/td><\/tr><tr><td>Market Capitalization<\/td><td>Generally remains the same immediately<\/td><td>Generally remains the same immediately<\/td><\/tr><tr><td><a href=\"https:\/\/lakshmishree.com\/blog\/liquidity-in-stock-market\/\">Liquidity<\/a><\/td><td>Usually improves<\/td><td>Usually improves<\/td><\/tr><tr><td>Cost to Shareholder<\/td><td>No additional cost<\/td><td>No additional cost<\/td><\/tr><tr><td>Taxation<\/td><td>Capital gains tax may apply when shares are sold<\/td><td>Cost of acquisition is adjusted after the split<\/td><\/tr><tr><td>Impact on EPS<\/td><td>EPS decreases due to higher share count<\/td><td>EPS decreases due to higher share count<\/td><\/tr><tr><td>Impact on Share Price<\/td><td>Price adjusts after the bonus issue<\/td><td>Price adjusts after the split<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 id=\"similarities-between-bonus-shares-and-stock-split\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-81c5ba8dbb4e880548bdcadc12f3a6ca\"><strong>Similarities Between Bonus Shares and Stock Split<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Despite their differences, bonus shares and stock splits have several things in common.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Increase the number of shares held by investors.<\/li>\n\n\n\n<li>Do not immediately increase shareholder wealth.<\/li>\n\n\n\n<li>Do not change the ownership percentage of existing shareholders.<\/li>\n\n\n\n<li>Usually improve stock liquidity.<\/li>\n\n\n\n<li>Can make shares more attractive to retail investors.<\/li>\n\n\n\n<li>Often create positive market sentiment.<\/li>\n\n\n\n<li>EPS decreases due to higher share count<\/li>\n<\/ul>\n\n\n\n<h2 id=\"benefits-of-bonus-shares\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-e69f8a869863b998e6cc1b950c29c8c0\"><strong>Benefits of Bonus Shares<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A bonus issue can benefit both companies and shareholders.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Rewards existing shareholders without paying cash.<\/li>\n\n\n\n<li>Reflects the company's strong reserves.<\/li>\n\n\n\n<li>Improves trading liquidity.<\/li>\n\n\n\n<li>Makes the stock more affordable after the price adjusts.<\/li>\n\n\n\n<li>Can strengthen investor confidence.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"benefits-of-stock-split\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-88c7bc4d1c398533a78b495bb8431105\"><strong>Benefits of Stock Split<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Companies usually announce stock splits after a sharp rise in their share price.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Some key benefits include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Lowers the market price per share.<\/li>\n\n\n\n<li>Makes the stock more affordable.<\/li>\n\n\n\n<li>Encourages higher trading activity.<\/li>\n\n\n\n<li>Improves liquidity.<\/li>\n\n\n\n<li>Attracts more retail investors.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"909\" height=\"280\" src=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Free-AMC.jpeg\" alt=\"\" class=\"wp-image-15684\" srcset=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Free-AMC.jpeg 909w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Free-AMC-752x232.jpeg 752w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Free-AMC-768x237.jpeg 768w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/08\/Free-AMC-150x46.jpeg 150w\" sizes=\"(max-width: 909px) 100vw, 909px\" \/><\/figure>\n\n\n\n<h2 id=\"tax-implications-of-bonus-shares-vs-stock-split\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-017edd352572aaefb613152d394ce1fe\"><strong>Tax Implications of Bonus Shares vs Stock Split<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The tax treatment of bonus shares and stock splits differs. Understanding these rules can help investors calculate capital gains correctly.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Note: Tax laws may change over time. Investors should refer to the latest Income Tax provisions or consult a tax professional.<\/em><\/p>\n\n\n\n<h3 id=\"taxation-of-bonus-shares\" class=\"wp-block-heading\"><strong>Taxation of Bonus Shares<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">For bonus shares:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Shares are received free of cost.<\/li>\n\n\n\n<li>Capital gains tax is applicable only when the shares are sold.<\/li>\n\n\n\n<li>The holding period is calculated separately for bonus shares.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"taxation-of-stock-split\" class=\"wp-block-heading\"><strong>Taxation of Stock Split<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">For a stock split:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>There is no tax when the split takes place.<\/li>\n\n\n\n<li>The original cost of acquisition is spread across the increased number of shares.<\/li>\n\n\n\n<li>Capital gains are calculated when the shares are eventually sold.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">For a better understanding of how short-term and long-term capital gains are taxed on equity investments, read our detailed guide on<a href=\"https:\/\/lakshmishree.com\/blog\/blog-ltcg-vs-stcg-tax-india\/\"> LTCG vs STCG Tax in India<\/a>, which explains the applicable tax rates, holding periods, and capital gains calculations.<\/p>\n\n\n\n<h2 id=\"does-a-bonus-issue-or-stock-split-increase-wealth\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-223ac8f3d4d1ff987f965365dc2f314a\"><strong>Does a Bonus Issue or Stock Split Increase Wealth?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The simple answer is <strong>no<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Neither action creates instant wealth because the market price adjusts in line with the increase in the number of shares.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, they may indirectly benefit investors if:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Improved liquidity attracts more buyers.<\/li>\n\n\n\n<li>Positive market sentiment supports future demand.<\/li>\n\n\n\n<li>The company continues to deliver strong financial performance.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Over the long term, wealth creation depends on the company's earnings, growth, and business fundamentals, not the corporate action itself.<\/p>\n\n\n\n<h2 id=\"conclusion\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-921e6543a70f945f0fdcbcc625eb75b9\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">When talking about <strong>bonus share vs stock split<\/strong>, it is important to understand that both corporate actions increase the number of shares but achieve different objectives.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A bonus issue converts reserves into share capital and rewards shareholders with additional shares. A stock split reduces the face value of shares to improve affordability and liquidity. While both can create positive market sentiment, they do not immediately increase shareholder wealth.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Instead of viewing these announcements as standalone investment signals, consider the company's financial health, growth prospects, and long-term performance before making an investment decision.<\/p>\n\n\n\n<h2 id=\"frequently-asked-questions\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-93c71607d0132220d56971aea9ea1af7\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1786097344013\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>1. Which is better, bonus shares or stock split?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Neither is inherently better. Bonus shares reward shareholders by capitalizing reserves, while stock splits improve affordability. The better choice depends on the company's objective and your investment goals.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1786097359078\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>2.Are bonus shares taxable?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Receiving bonus shares is generally not taxable. However, capital gains tax may apply when you sell them, subject to the applicable tax rules.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1786097377398\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>3.Does market capitalization change after a stock split?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>No. Immediately after the split, the market capitalization generally remains the same because the increase in the number of shares is offset by a lower share price.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1786097392518\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>4.Why do companies split their stock?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Companies split their stock to reduce the market price per share, improve liquidity, and make the stock more accessible to retail investors.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1786097408054\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>5.Can a company announce both bonus shares and a stock split?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Yes. A company can announce both corporate actions, although they are typically undertaken at different times to achieve different objectives.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1786097429926\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>6.Is bonus issue a good sign for investors?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>A bonus issue may indicate that a company has accumulated healthy reserves and is confident about its financial position. However, it should not be the only factor considered before investing. Always evaluate the company's fundamentals and future growth potential.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n<p class=\"has-vivid-red-color has-text-color has-link-color wp-elements-8d5244fc2cf462091e4a478a9e3302d8 wp-block-paragraph\">Disclaimer: This article is intended for educational purposes only. Please note that the data related to the mentioned companies may change over time. The securities referenced are provided as examples and should not be considered as recommendations.&nbsp;<br><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When talking about bonus share vs stock split, many investors think both corporate actions are the same because it increases the number of shares they own.&nbsp; However, they work differently and have different effects on a company's financial statements. Understanding these differences can help you interpret corporate announcements and make informed investment decisions. In this [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":15706,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[269,301,327],"tags":[816,815,817],"class_list":["post-15705","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-basics","category-investment-learnings","category-trading","tag-bonus-share","tag-bonus-share-vs-stock-split","tag-stock-split"],"_links":{"self":[{"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/posts\/15705","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/comments?post=15705"}],"version-history":[{"count":2,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/posts\/15705\/revisions"}],"predecessor-version":[{"id":15721,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/posts\/15705\/revisions\/15721"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/media\/15706"}],"wp:attachment":[{"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/media?parent=15705"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/categories?post=15705"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/tags?post=15705"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}