The Federal Board of Revenue (FBR) has issued a procedure for determination of value of bonus shares issued by a company, not quoted on the stock exchange, to the shareholders of the company. Through SRO 1085(1)/2016 issued here Friday, the FBR has amended Income Tax Rules, 2002 for the purpose of payment of tax by companies (not quoted on stock exchange) issuing bonus shares to the shareholders of the company.
Under section 236N (bonus shares issued by companies not quoted on stock exchange) of the Income Tax Ordinance, 2001, every company, not quoted on stock exchange, issuing bonus shares to the shareholders of the company, shall deposit tax, within 15 days of the closure of books, at the rate of five percent of the value of the bonus shares on the first day of closure of books, whether or not the tax has been collected by the company, it added.
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 Ordinance shall be the face value, or the break-up value, as determined below, whichever is higher.
The break-up value of the bonus share shall be determined in the following manner: Firstly, 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.
Secondly, the total equity of the company shall be determined by adding paid-up capital of the ordinary shares and the reserves and the term "reserve" shall have the same meaning as defined under sub-section (3) of section 5A of the Income Tax Ordinance, the FBR added.
Comments
Comments are closed for this article.