How to determine Holding period of shares in the case of ( Listed shares)

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Daya (Querist)
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15 December 2024 Bonus Shares ,
Split of shares,
Merger of shares,
De-merger of shares,
Right issue of shares,
Amalgamation of shares, and
Buy Back of shares
HOW TO DETERMINE PERIOD OF HOLDING
HOW TO DETERMINE COST OF ACQUISITION
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Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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12 August 2025 Great question! Holding period and cost of acquisition for listed shares can vary based on corporate actions like bonus shares, splits, mergers, etc. Here’s a breakdown for each case:
1. Bonus Shares
Holding Period: Holding period of bonus shares is considered to have started from the date the original shares were acquired.
Cost of Acquisition: The cost of acquisition of original shares is apportioned between original and bonus shares based on their market values on the date of bonus issue or face value if market value is not available.
2. Split of Shares
Holding Period: The holding period of shares post-split is considered from the date of acquisition of original shares.
Cost of Acquisition: Total cost of original shares is apportioned among the split shares. For example, if 1 share splits into 2, cost per share is halved.
3. Merger of Shares
Holding Period: Holding period of merged shares includes the period the shareholder held the shares in the merged company.
Cost of Acquisition: Cost of acquisition of original shares is taken as cost of merged shares. If shares are exchanged, the cost is based on fair market value on the date of merger.
4. De-merger of Shares
Holding Period: Holding period of shares received after de-merger includes the holding period of original shares.
Cost of Acquisition: Cost of acquisition of original shares is apportioned between old and new shares based on relative market values on the date of de-merger.
5. Right Issue of Shares
Holding Period: Holding period of right shares starts from the date of allotment of right shares.
Cost of Acquisition: Cost of acquisition of original shares is adjusted by adding the cost paid for right shares, weighted by the number of shares held and right shares allotted.
6. Amalgamation of Shares
Holding Period: Holding period of shares in amalgamated company includes the holding period of shares in the amalgamating company.
Cost of Acquisition: Cost of acquisition is based on the cost of shares in the amalgamating company, adjusted for the exchange ratio.
7. Buyback of Shares
Holding Period: Not applicable for buyback; capital gains arise at buyback.
Cost of Acquisition: Cost is the original purchase cost of shares. Gains are calculated as difference between buyback price and cost.
Summary Table
Corporate Action Holding Period Cost of Acquisition
Bonus Shares From original shares acquisition date Cost apportioned between original and bonus shares
Split Shares From original shares acquisition date Cost divided among split shares
Merger Includes pre-merger shares holding Cost based on original shares / FMV at merger
De-merger Includes original shares holding Cost apportioned based on FMV at de-merger
Right Issue From date of allotment of right shares Adjusted cost including right shares payment
Amalgamation Includes amalgamating company shares Cost adjusted by exchange ratio
Buy Back NA (gain at buyback) Original cost

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