Fair market Value in case of demerger

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This discussion addresses how to determine the fair market value (FMV) of shares in a demerged company for capital gains tax purposes. When a company demerges, and the new entity's shares weren't listed before 31st January 2018, the FMV is typically calculated based on the demerger ratio of the original company. This ensures accurate calculation of long-term capital gains on the sale of these shares.

suren

suren (Querist)
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15 July 2024 Dear Experts,

The assessee has purchased 1000 shares of company A in 2010. The company got demerged in 2023 and 1000 shares of company B(demerged entity) were issued. The assessee sold shares of company B in FY 2023-24 resulting in long term capital gain on listed equity shares.
What would be fair market value of shares of company B as it was not listed separately before 31/01/2018? FMV of original company is to be taken as a whole or as per the demerger ration of original company and demerged company?

Please guide.

Thanks