Tata Motors Demerger Capital Gains Tax: Tata Motors’ dearrs have come into effect from 1 October. Under this, CV and PV divisions will turn into different listed companies. Investors with a record date by October 14 will get new CV shares in the ratio of 1: 1.
Tata motors demerger: The stock market began with a decline on Friday, 3 October. During this time, Tata Motors shares are shared. Tata Motors’ disorder has come into force from October 1, 2025. This means that now the company’s commercial vehicle (CV) and Passer Vehicle (PV) divisions will convert into different listed companies, which investors keep the company shares by October 14 (record date), they will get shares of new CV company in the ratio of 1: 1. TML Commercial Vehicles Ltd is likely to be listed in early November. So the question is how the capital gains tax will work in this disorder and what should the investor take care of?
Will Tata Motors get tax on getting a share?
Moneycontrol.com has quoted experts in one of his news that there will be no tax on getting new shares. This will only be a new share in your demat account, which is good news for investors. Under Section 47 (VIB)/(VID)/(VB) of the Income Tax Act, share transfer is not considered taxable transfer. Meaning, until you sell shares, there will be no tax.
How to share the value of the share?
When there is a disorganization, the new share is not free. The cost of acquisition has to be divided into old and new shares. This is done by the proportion of NET Book Value (NBV), not from the market price. For example, if you bought the shares for Rs 1,000 and the company’s NBV ratio is 60:40, then it will be charged on the shares of the new company 600 rupees old company and 400 rupees. Small investors can also easily find out the correct cost in this way. According to experts, when the NBV ratio of Tata Motors is declared, then adopt this formula.
Holding period and capital gains
Experts say, the holding period of the share in the dear will not start back. According to Section 2 (42A), the holding period of the new share includes the old share time. If you bought shares in 2021 and the dimpar was in 2023, both (old and new) shares will be counted from the holding period. Its advantage is in LTCG (Long-Term Capital Gains) tax, which is usually low. Keep in mind that if both companies give dividend, tax will be deducted separately. It has to be recorded as a separate source from income.
What precautions should be taken while selling shares?
- Keep the original information with NBV ratio from the company or RTA.
- Give your stock a correct label to a demat spreadsheet or trading account.
- When selling, see the cost basis and prescription price correct, do not rely on the information of the platform.
- Enter the correctly in Schedule 112A in tax returns.
- According to experts, many tax software now supports it, but your numbers should be correct.
Disclaimer: This article is only for general information. There is no advice for tax or investment given in it. The stock market is subject to investment risks. The investor should always take decisions related to any share or disorder only with the advice of his financial status, investment targets and tax advisors and market experts.
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