Stock split, bonus shares and buybacks: what changes for you

A stock split and a bonus issue both give you more shares for free. But each share is then worth less, so the total value of what you own doesn’t change on the day. A buyback is the opposite move: the company offers to buy some of its own shares back from shareholders. These are called corporate actions, and you’ll see them in your demat account.

Stock split. The company divides each share into smaller pieces. In a 1-for-2 split, each share becomes two, and the price roughly halves. Each share’s face value is divided too. Nothing about the business changes. Companies often split to make a high share price easier for small investors to buy. Read more on the stock split.

Bonus issue. The company gives existing shareholders extra shares, from its reserves, at no cost. In a 1:1 bonus issue, you get one new share for each you hold, and the price adjusts down to match. Unlike a split, the face value stays the same. For a bonus announced from 1 October 2024, SEBI requires the new shares to be tradable two working days after the record date.

An illustration. You hold 100 shares at 1,000 rupees, worth 1 lakh rupees (made-up numbers). After a 1-for-2 split or a 1:1 bonus, you hold 200 shares at about 500 rupees each. Still about 1 lakh rupees. More shares, same value.

Buyback. Here the company uses its cash to buy back some of its own shares, usually at a set price. You choose whether to offer your shares. A buyback reduces the number of shares in the market, but it’s your call whether to take part, and the price and terms are in the company’s offer.

Did you know? Buyback tax has flip-flopped. From 1 October 2024 to 31 March 2026, money you got in a buyback was taxed as dividend. Budget 2026-27 moved it back to capital gains from 1 April 2026, with a higher effective rate for promoters. Check the current rules before you tender shares.

What to watch for. The record date decides who gets the corporate action: you must hold the shares on that date. Don’t buy a share just because a split or bonus is coming. The value doesn’t change, and the share’s price already reflects the announcement.

The takeaway. Splits and bonuses change how many shares you own, not what they’re worth. A buyback is an offer you can take or leave. None of them, on its own, makes the company more valuable.

More to read: IPOs explained, the full cost of buying shares, and capital gains tax.