Introduction
The Indian Oil Corporation (IOC) is India’s largest commercial enterprise and the leading oil and gas company in the country. Founded in 1959 and headquartered in New Delhi, the company is one of the largest public sector undertakings and has a presence in almost all sectors of the Indian economy. The company has a wide network of refineries and marketing outlets across the country and is one of the most profitable companies in India. IOC is also well known for its bonus share schemes and the bonus shares offered by the company have been a great source of income for investors over the years.
History of Bonus Shares
The IOC has been offering bonus shares to its shareholders since 1975. The first bonus issue was made in that year when the company declared a bonus of 1:1, i.e. one bonus share for every one existing share. Since then, the company has been regularly issuing bonus shares at regular intervals. Some of the major bonus issues made by the company since then include a 2:3 bonus issue in 1981, followed by a 1:1 issue in 1999 and a 1:1 issue in 2004. The most recent bonus issue was in July 2019 when the company declared a bonus of 1:1.
Reasons Behind Bonus Shares
The bonus shares issued by IOC are generally aimed at rewarding existing shareholders and encouraging new investors to invest in the company. By issuing bonus shares, the company increases the number of shares outstanding, resulting in a dilution of the company’s earnings per share. This also helps in increasing the liquidity of the shares, making it easier for investors to buy and sell the shares. Another reason for issuing bonus shares is to reward existing shareholders for their loyalty and trust in the company.
Tax Implications
Bonus shares issued by IOC are tax-free in the hands of the shareholders. This means that the shareholders do not have to pay any tax on the bonus shares received. However, if the bonus shares are sold within one year of the issue date, the capital gains arising out of the sale are taxable as per the provisions of the Income Tax Act, 1961.
Recent Bonus Share Issues
The most recent bonus issue by IOC was in July 2019 when the company declared a bonus of 1:1. This issue was made to reward the shareholders for their loyalty and trust in the company. Prior to that, the company had declared a bonus of 1:1 in 2004. The company has also declared several other bonus issues since then, including a 2:3 bonus issue in 1981 and a 1:1 issue in 1999.
Benefits of Investing in IOC Bonus Shares
Investing in bonus shares of IOC can be a great way to earn additional income. The bonus shares issued by the company come with several benefits, including the fact that they are tax-free in the hands of the shareholders. Additionally, the bonus shares are also more liquid than normal shares, making it easier for investors to buy and sell them. Lastly, investing in bonus shares also allows investors to benefit from the company’s future growth, as the increase in the number of shares will lead to a higher share price.
Conclusion
The history of bonus share issues by the Indian Oil Corporation is an interesting one. The company has been regularly issuing bonus shares since 1975 and has rewarded its shareholders with a number of attractive bonuses over the years. Investing in bonus shares of IOC can be a great way to earn additional income, as the bonus shares are tax free and are more liquid than normal shares. Thus, investing in IOC bonus shares can be a great way to earn additional income and benefit from the company’s future growth.