Income tax treatment in case of mergers/demergers

As mergers and demergers are getting common in Indian equity markets, I thought of starting new thread to discuss various scenarios where tax experts on our forum can answer questions of investors like me.

For first post, I will start with current example of Gruh Finance’s merger with Bandhan Bank. In this case, Gruh Finance was dissolved and all shareholders of Gruh were issued new shares of Bandhan Bank on 30th Oct 19.(Gruh shares stopped trading from 17th Oct 19) Now I have following questions for calculation of capital gains tax when I sell shares of Bandhan bank in future-

  • What should be considered as the dates of purchase of Bandhan bank shares assuming if I have purchased original Gruh shares on various dates. For eg. 100 each on 6 Jun 18, 6 Oct 18, 6 Dec 18 and 6 Mar 19?
  • What should be considered as the date of purchase of new Bandhan shares if I am holding Gruh shares before listing of Bandhan Bank on stock exchanges i.e. 27th March 2018?
  • What should be considered as purchase price for new Bandhan shares? For eg. If hold 1000 shares of Gruh, I will receive 568 new shares of Bandhan. If I purchased 1000 shares of Gruh at Rs.300 each, do I need to consider Bandhan at Rs 528.17 (300*1000/568) to match purchase value of Rs 3,00,000?
  • What should be considered as purchase price for new Bandhan shares if original Gruh Finance shares were received as Bonus (purchase price = 0)?
  • If the purchase date is considered as 30th Oct (date on which shares got deposited in my account), then do I need to use weighted average price of all my shares to match the purchase value? In other words, does all new Bandhan shares would be considered at same purchase price?

Look forward to response from experienced investors who may have gone through similar exercise in the past.

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