Capital gains treatment of Rights Entitlement --> Partly Pad ---> Fully Paid Shares --> Sale

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This query is : Resolved

Vidya Hariharan (Querist)

29 December 2021 Hello,
Need to understand the capital gains tax treatment in the following scenario:
Buy Rights Entitlement(RE) from the market, get Partly Paid(PP) shares, pay the calls on these, convert to Fully Paid shares and then Sellthe Fully Paid shares:
1. Is the Purchase price of RE included in the cost of acquisition of Fully Paid Shares?
2. What is the date of Acquisition for the Fully Paid Shares?
3. Because the ISIN's change at each stage (i.e. RE, PP, Fully Paid), are these 3 different transactions for Capital gains tax computation?
4. If Yes, would that mean there would be a Capital Loss on RE and PP and a Capital Gain on the Fully Paid share?

Context: Reliance Industries Partly Paid --> Fully Paid conversion recently.

Regards - Vidya

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

29 December 2021 1. Yes.
2. Date of allotment of the paid up share.
3. No. Its rights acquired for the final share. Those are not sold.
4. No. CG liability would arise when the fully paid up shares are sold.

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