Bonus Shares and Cash Dividends in NEPSE: Tax, Timing and Why Yours Are Late
Updated · 5 min read
What a bonus share actually gives you, how cash and bonus dividends are taxed in Nepal, why bonus shares take months to reach your demat, and how the price adjusts.
A Nepali company announcing "20% dividend" is usually announcing a package: some cash, some bonus shares, quoted as a percentage of paid-up value. "15% bonus and 5.26% cash" on a Rs 100 par share means 15 new shares per 100 held, plus Rs 5.26 per share in cash — and the cash portion is sized to cover the tax on the bonus.
What a bonus share is worth
By itself, nothing. The company capitalises its reserves and issues more shares against the same assets; you own more units of an unchanged whole, and the market price adjusts down proportionally on the ex-date. A 10% bonus on a Rs 550 share adjusts the reference price to Rs 500.
What it does change is your cost basis. Your weighted average cost drops because the same money now buys more shares — and that lower cost is what future capital gains tax is computed against. Bonus shares defer tax; they do not avoid it.
Tax
| Item | Rate | Who pays |
|---|---|---|
| Cash dividend, resident individual | 5% final withholding | Deducted at source |
| Cash dividend, non-resident | 15% (subject to treaty) | Deducted at source |
| Bonus share | 5% on the bonus amount | Withheld by the company |
Dividend tax is a final withholding tax for resident individuals — the amount that lands in your account is yours, with no further return to file for it. Rates move with the annual Finance Act, so confirm the current year before planning around them.
The timeline, and why it feels broken
- Board proposal. A dividend is only a proposal until the AGM approves it, and regulators can require changes first — bank and insurance dividends need central regulator clearance.
- Book closure. Holders on record on this date are entitled. T+2 settlement applies, so buy at least three trading days earlier to qualify.
- AGM approval. Frequently months after the proposal.
- Distribution. Cash typically within 30 days of AGM approval, into the bank account linked to your demat or through the registrar. Bonus shares wait on SEBON registration, CDSC crediting and NEPSE listing, which routinely takes several months.
So a bonus announced last year and still missing from your demat is normal, not fraud. Two real reasons it may be genuinely stuck: shares still held in physical certificate form cannot be credited at all until they are dematerialised, and a stale or closed bank account linked to your demat will bounce the cash payment.
Bonus versus cash: which is better for you
Cash is realised money taxed once at 5%. Bonus keeps the capital compounding inside the company and pushes the tax into a future capital gain — good if the company earns well on retained capital, poor if it is simply inflating paid-up capital to meet a regulatory minimum, which dilutes EPS and usually caps the price. Look at whether earnings grew as fast as the share count on the company page before treating a large bonus as good news.
When the shares finally arrive, record them as a bonus in the portfolio tracker rather than as a zero-price buy, so the average cost and realised-gain maths stay correct.
NepsezAI provides information and analysis only. Nothing here is registered investment advice or a recommendation to buy or sell any security.