Tata Motors demerger: Understand capital gains tax implications for investors

Tata Motors is demerging its commercial and passenger vehicle businesses into two separate listed companies, effective October 1. Shareholders holding Tata Motors stock on October 14 will receive one share of the new commercial vehicle company for each share they own. No capital gains tax is levied upon receiving the new shares; tax is only incurred when the shares are eventually sold, with the holding period carrying over from the original shares.