How to calculate tax on selling stocks post split – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/portfolio/personal-finance/how-to-calculate-tax-on-selling-stocks-post-split/article38037452.ece

WIDE

I had 25 Vaibhav Global shares purchased on 4/3/21 at ₹3930.49 and 25 shares on 5/3/21 at ₹3740.19. Shares were split on 7/5/21 in the ratio 1:5 resulting in 250 shares. I sold 50 shares at ₹810.01 on 11/6/21, 100 shares on 17/6/21 at ₹805.58 and another 100 on 5/10/21 at ₹698.35. How do we calculate short term gain/loss for this?

Whenever new shares are received on account of stock split, total number of shares would increase but total value of investment remains the same. The total value of investment should be then divided into total number of shares available with the investor after stock split. In your case, acquisition cost would be calculated as shown in the table below.

Based on stock split, the cost of acquisition would be calculated as follows.

Total cost of acquisition (1) : ₹1,91,767. Total shares after stock split (2) : 250 shares. New cost of acquisition: ₹767.068 (1/2).

Further the short-term capital gains/loss would be computed as per the table below.

The writer is Partner, Deloitte India

Send your queries to taxtalk@thehindu.co.in

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s