Jio Financial Services shares: How to calculate capital gains after Reliance demerger

livemint.com:

share price of RIL ex-JFSL was valued at ₹2,580 per share while Jio Financial Services at ₹261.85 per share.  In line with RIL's exchange filing on the subject of the cost of equity shares post the demerger, the cost must be apportioned as 95.32% towards Reliance Industries Limited and the residual as cost to acquire holdings in RSIL.  “For instance, if RIL shares were acquired on some day before the demerger at an effective rate of ₹2,800, ₹2,669 (95.32% of ₹2,800) must be considered as the cost of acquiring shares of RIL. The residual ₹131 ( ₹2,800 - ₹2,669) must be considered as the cost of acquiring shares of RSIL for the purpose of computing capital gains," said Abhishek Soni CEO and Co-founder Tax2win Tax and investments expert Balwant Jain said shares are considered capital assets under income tax law, and any gain on their sale is treated as capital gains.

However, in the case of a merger, demerger the I-T law does not consider the swap of shares as a transfer.  “Capital gains on the sale of shares are calculated on the basis of the holding period and the date of acquisition of shares. If someone receives shares as part of a merger, or demerger, the holding period is counted from the date of purchase of shares," said Balwant Jain.

However, the tax liability will only occur at the time of the sale of shares by the investor. Shareholders won't be able to buy or sell JFS shares.

The demerged entity will also be included in the Nifty 100, Nifty 200, and Nifty 500 indices, as well as other sectoral indices. In the case of listed companies, equity shares held for more than 12 months are classified as long-term capital assets, while those held for a shorter period are classified as short-term capital assets.