Shares received in a spin-off are not taxed at the time of credit. Tax applies only when you sell them.
Cost of acquisition – Unlike bonus shares, the cost is not zero. The original cost of your parent company shares is split between the parent and the new entity based on their respective valuations post spin-off. This allocated portion becomes your acquisition cost for the spun-off shares.
Capital gains – Calculated based on the allocated cost and your holding period from the date the shares are credited to your DEMAT.
Holding period – Starts from the date the spun-off shares are credited, not from when you bought the parent company’s shares.
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