New Delhi, May 1 -- Income from the stock market is taxed differently depending on its nature, with dividends, bonus shares and buybacks each governed by separate rules under the Income Tax Act. Dividends are treated as taxable income in the hands of investors, while bonus shares and buybacks are subject to different tax treatment at the time of allotment, sale or distribution.

These distinctions affect how investors calculate their tax liability and report such income in their returns. The applicable tax rates, holding period, and tax treatment vary across these categories, making it crucial to correctly classify each type of income when filing the income tax return (ITR).

Shares are generally not taxed at the time of allotment. This p...