Tata Motors has officially announced the critical apportionment ratio that will guide shareholders in determining the acquisition cost of their shares following the historic demerger of its Passenger Vehicles (PV) and Commercial Vehicles (CV) businesses. This move finalizes a significant corporate restructuring for the Indian automotive giant.
Key Dates and Listing Details
The demerger of Tata Motors officially took effect on October 1, 2025. The company set October 14 as the record date to identify eligible shareholders. In a major development for investors, the equity shares of the newly formed commercial vehicle entity, Tata Motors Ltd (TMCV), began trading on both the BSE and the National Stock Exchange (NSE) on November 12.
Understanding the Cost Apportionment Ratio
According to a formal filing with the stock exchanges, shareholders must allocate their original investment cost in a specific proportion. 68.85% of the original cost will be assigned to Tata Motors Passenger Vehicles Ltd (TMPVL), while the remaining 31.15% will be allocated to the commercial vehicles arm, Tata Motors Ltd (TMCV), which was formerly called TML Commercial Vehicles Ltd.
To illustrate this with a clear example: imagine a shareholder possessed 1,000 shares of Tata Motors, purchased at ₹400 each. This would mean the total acquisition cost before the demerger was ₹4,00,000. Following the demerger and based on the share entitlement ratio, this shareholder received 1,000 shares of the CV company.
The total cost of ₹4,00,000 is now split as follows:
- ₹1,24,600 (31.15%) becomes the cost of acquisition for the 1,000 shares of Tata Motors Ltd (the CV business).
- ₹2,75,400 (68.85%) represents the cost for the 1,000 shares of Tata Motors Passenger Vehicles Ltd.
Tax Implications and Holding Period Clarity
The company provided crucial clarity on the tax treatment of this corporate action. It confirmed that the allotment of new Commercial Vehicles shares will not be considered a transfer under Section 47(vid) of the Income Tax Act, 1961.
This is a vital point for investors, as it means the transaction is tax-neutral at the time of the demerger. Furthermore, the holding period for the newly received CV shares will be calculated from the original date of purchase of the old Tata Motors shares, providing continuity for determining long-term or short-term capital gains in the future.
In early trading following the announcements, Tata Motors Passenger Vehicles shares were seen trading at ₹399.70, down by 0.65%, while shares of Tata Motors (CV) were trading 0.50% lower at ₹326.00 on the BSE.
