NTPC has recently preferred issuing bonus debentures
to its shareholders instead of bonus shares due to number of reasons. There are
many benefits of issuing bonus debentures some of which are:
a.
Interest on
bonds issued by company are tax-deductible and hence resulting in lower taxes.
b.
Issue of
debentures does not increase the base of equity capital and hence there is no
dilution of equity shares.
c.
The bonus
debentures issued to shareholders is deemed dividend u/s 2(22) and hence
companies are liable to pay dividend distribution tax on the same and hence no
burden of tax on the shareholder.
A very few companies have earlier issued bonus
debentures some of which are Blue Dart, Coromandel International, Dr. Reddy’s
etc.
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