LTCG Calculation after de-merger of a Cos

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This discussion clarifies how to calculate the adjusted cost price for shares of ABC Ltd and the newly formed XYZ Ltd following a demerger. The original cost basis of ABC Ltd shares needs to be apportioned between the original and new entities based on their market values at the time of demerger and listing. This adjusted cost is crucial for calculating Long Term Capital Gains (LTCG) accurately when these shares are eventually sold.

Proloy Samaradivakera

Proloy Samaradivakera (Querist)

01 June 2025 I bought 1000 shares of ABC Ltd in 2021 on 2 occasions and weighted avg buy rate of the share is Rs 144. In Dec 22 there was a de-merger of ABC Ltd to form a new entity called XYZ Ltd. Shares of the XYZ Ltd was allotted in the ratio of 1:1 – 1000 shares allotted for XYZ Ltd in Dec22. In Feb23 listing of the XYZ happened and market rate of the XYZ Ltd on listing day was Rs 31/ shr and ABC Ltd was Rs 118/ share. What is the calculation now for the adjusted cost price/ buy rate of shares of ABC Ltd and XYZ Ltd for LTCG calculation purpose in case the shares are sold today?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

12 August 2025 https://docs.google.com/document/d/1iSILJ5ezyWE4cfTBLdYA3X4wwbQJaXfE1H8IT8SNovg/edit?usp=sharing

Proloy Samaradivakera

Proloy Samaradivakera (Querist)

13 August 2025 Thank you very much for this detailed explanation. I could understand what you have explained. Should I have further queries I will get back to you.

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