When a company A is merged with company B and if the investor who has purchased shares of A earlier got shares of B as per the ratio. How the capital gains will be calculated when he sells the shares of company B?
The cost of acquisition and the period of holding of the shares of company B will be the same as that of company A. For example: say you had 100 quantity of company A shares at a total investment of Rs. 5000 (avg price of 50 per share) bought on 25/01/2019. Let’s say the the merger ratio was 1:2, the total cost of 50 shares of company B after the merger will be Rs. 5000 (avg price of Rs. 100 per share) and the type of capital gain will be ascertained from the original date of purchase of company A i.e., 25/01/2019. Refer to Section 49 (2) and Section 2 (42A) (c ) for more.