ISLAMABAD: Federal Board of Revenue (FBR) has issued Income Tax Rules, 2002 (updated September 08, 2020) which explained the determination of value of bonus shares issued by a company not quoted on the stock exchange.
According to the rules, the value of bonus shares issued by a company, not quoted on the stock exchange, to its shareholders in terms of sub-section (6) of section 236N of the Income Tax Ordinance, 2001 shall be the face value, or the breakup value, as determined below, whichever is higher.
The breakup value of the bonus share shall be determined in the following manner:-
(a) the total equity of the company divided by the total number of ordinary shares (after the issuance of bonus shares) , as of the last day of the period for which financial statements are prepared and approved by the Board of Directors for the purpose of issuance of bonus shares. The total equity of the company shall be determined by adding paid up capital of the ordinary shares and the reserves; and
(b) for the purpose of sub-clause (a) above, the term reserve shall have the same meaning as defined under sub-section (3) of section 5A of the Ordinance.