How are capital gains from the sale of a stock split taxed?
- The face value of Tata Motors shares is Rs. 10 per share.
- Mr. Kumar buys 100 shares of Tata Motors on January 2020 at Rs. 200 per share
- The company announces a stock split from a face value of Rs.10 to Rs. 5 in January 2021. As a result, Mr. Kumar will have 200 shares (100 original shares + 100 bonus shares).
- In March 2021, he sells these 200 shares at Rs. 210 per share.
- Since the original 100 shares were held for more than a year, LTCG tax will be applicable to the entire sale value. Had the shares been sold within 12 months of purchase, STCG tax would have been applicable.
(Qty x Price)
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