Capital gains tax implications for shares after a demerger, including acquisition cost and tax calculations
Piramal pharma was demerged from Piramal Enterises and was allotted four shares in lieu of one share of Piramal Enterprises three years ago.
My acquisition price of Piramal Enterprises was ₹2 as it was acquired in 1991 when company was Nicholas Pharma.
Please guide me how to calculate acquisition price of Piramal Pharma for calculating capital gains.
Lalit Kumar Kalra
From the facts stated above, understand that you were allotted four shares in Piramal Pharma (resulting company) for every one share held in Piramal Enterprises (demerged company). You acquired the shares of the demerged company at ₹2 per share in 1991.
In terms of section 49 (2C) of the Act, cost of acquisition (COA) of shares in the resulting company shall be proportionate to the original cost of shares held in the demerged company. The proportion is based on the net book value of assets transferred to the resulting company relative to the net worth of the demerged company immediately before the demerger.
COA of shares in resulting company = COA of shares in demerged company*(Net book value of assets transferred to the resulting company/ Net worth of demerged company before the year demerged from Piramal Pharma).
Normally, in a demerger, the company will be providing the above details regarding net book value, networth, etc to the participating shareholders.
My income, by way of pension, bank interest and dividend, for FY 26 will be around ₹11 lakh. STCG by way of trading of shares may be ₹0.75 lakh.
Though the total income is below the threshold taxable limit of ₹12 lakh, whether I have to pay 20 per cent on STCG of ₹0.75 lakh.
Suppose the STCG is ₹2 lakh, the total income works out to ₹13 lakh and what will be the tax implications for that?
A Shanthi
Section 111A read with section 87A of the Income Tax Act 1961, provides that short-term capital gains (STCG) will be included in the total income for the purposes of determining rebate eligibility. However, tax rate cannot be applied on the STCG as it is subject to tax at the special rate of 20 per cent. Accordingly, you will continue to pay tax on STCG of ₹0.75 lakh at the rate of 20 per cent. Assuming that if the STCG is ₹2 lakh and total income is ₹13 lakh, then tax liability will be ₹41,600 (tax on other income is NIL on account of rebate under section 87A).
The writer is Partner, Deloitte India
Published on November 22, 2025
aniltikotekar4sme.com 