Tata Motors on Thursday announced the apportionment ratio for determining the cost of acquisition of shares following the demerger of its Passenger Vehicles (PV) and Commercial Vehicles (CV) businesses.
Tata Motors demerger came into effect on October 1, 2025, and the record date was October 14. The equity shares of the newly demerged commercial vehicle (CV) arm of Tata Motors were listed on BSE and NSE on November 12.
Tata Motors Passenger Vehicles has announced the apportionment of cost of acquisition of equity shares of the company and Tata Motors (formerly TML Commercial Vehicles Limited) pursuant to the demerger.
Shareholders will allocate 68.85% of their original investment cost to Tata Motors Passenger Vehicles Ltd (TMPVL) and 31.15% to Tata Motors Ltd (TMCV), formerly known as TML Commercial Vehicles Ltd, according to the stock exchange filing.
Illustration of Cost Split
For instance, if a shareholder held 1,000 Tata Motors shares at ₹400 per share, the total cost of acquisition would amount to ₹4,00,000 before the demerger. Based on the Share Entitlement Ratio, 1000 shares of TMLCVL would be allotted to the said shareholder.
The total cost of acquisition of ₹4,00,000 would be apportioned in the aforesaid ratio:
– ₹1,24,600 (31.15%) will now represent the cost of acquisition for 1,000 shares of Tata Motors Ltd (CV arm).
– ₹2,75,400 (68.85%) will represent the cost for 1,000 shares of Tata Motors Passenger Vehicles Ltd (PV arm).
No Change in Holding Period or Transfer Treatment
The company emphasized that the allotment of new Commercial Vehicles shares will not be considered a transfer under Section 47(vid) of the Income Tax Act. Furthermore, the date of acquisition for the new CV shares will be deemed the same as that of the original Tata Motors shares held before the demerger.
“Post-listing, based on the cost allocation for shareholders, Tata Motors (CV) shareholders have seen significant gains. The cost of acquisition for Tata Motors shares works out to ₹205.59 based on the record-date price of the consolidated Tata Motors, while the stock is currently trading around ₹325, reflecting an appreciation of about 58% on cost price,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
On the other hand, the cost of acquisition for Tata Motors Passenger Vehicles shares comes to ₹454.41, and with the stock currently trading near ₹399, shareholders who held the stock on or before the record date are facing a notional loss of approximately 12%, Tapse added.
Tata Motors Demerger Tax Treatment
Under the demerger terms, shareholders received one share of Tata Motors Ltd (CV) for every one share held in Tata Motors Passenger Vehicles Ltd (PV). Tata Motors demerger will not be treated as a transfer for tax purposes as per the regulations.
The company clarified that the cost of acquisition of shares must be divided in proportion to the net book value of assets transferred in the demerger relative to the net worth of the company immediately before the split.
Tata Motors Share Price Outlook
Going forward, Tapse believes challenges are likely to persist for the TMPV segment, as a significant portion of its performance depends on the JLR business, with relatively lower contribution from the domestic segment.
“In contrast, TMCV is expected to continue its strong performance, supported by steady demand and operational efficiency, and is likely to deliver decent to healthy returns over the long term,” Tapse said.
At 11:45 AM, Tata Motors Passenger Vehicles share price was trading 0.65% lower at ₹399.70 apiece, while Tata Motors share price was trading 0.50% lower at ₹326.00 apiece on the BSE.
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