Clarification on Cost of Acquisition and Capital Gains Tax Treatment for Tata Chemicals

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Ashish Marwah (Querist)
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01 May 2025 Dear [Tax Consultant / Financial Advisor],

I seek your guidance regarding the correct cost of acquisition and tax implications for my investments in Tata Chemicals Limited (TCL) and Tata Consumer Products Limited (TCPL) in light of the 2020 demerger.

✅ Investment Background:
I purchased 250 shares of Tata Chemicals on November 1, 2011 at ₹374 per share, resulting in a total investment of ₹93,500.

Pursuant to the Scheme of Arrangement between Tata Chemicals and Tata Global Beverages (now Tata Consumer), I was allotted 285 shares of TCPL as of the record date March 31, 2020.

❓ My Questions:
What cost of acquisition per share should I consider for the 285 shares of Tata Consumer received under the demerger?

Tata Chemicals’ communication dated May 16, 2020, specifies a 0.66% cost allocation to TCPL and 99.34% to TCL.

Accordingly, the cost attributable to TCPL is ₹93,500 × 0.66% = ₹617.10, i.e., ₹2.17 per share.

What are the capital gains tax implications for the sale of both shares, which occurred in 2024?

I sold:

250 TCL shares at ₹1,055 each on 22-Jul-2024

285 TCPL shares at ₹1,194.40 each on 19-Jul-2024

Should the grandfathering provisions under Section 112A of the Income Tax Act be applied to Tata Chemicals shares using the fair market value of ₹722 as on 31-Jan-2018?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 May 2025 Yes, the grandfathering provisions under Section 112A of the Income Tax Act be applied to Tata Chemicals shares using the fair market value of ₹722 as on 31-Jan-2018.

Ashish Marwah

Ashish Marwah (Querist)
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01 May 2025 Dear sir. My question is What cost of acquisition per share should I consider for the 285 shares of Tata Consumer received under the demerger?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 May 2025 Consider 0.66% of 722 for TCPL shares of 285.
Similarly consider 99.34% of 722 for TCL.

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