Does anybody have any idea about possible listing date of JFS?
The listing date hasn’t been announced yet.
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There’s no specific rule on adjusting FMV in cases of corporate actions. If a stock was brought before 31 Jan 2018 and the demerger happened recently, there’s room for more questions if we adjust FMV to the parent company. Whether or not to adjust the remaining 4.62% to the child company. If the answer is yes, how? Since it was not listed in 2018, is it appropriate to show it as FMV etc?.
To conclude, we have more questions than answers, so we’re checking with our auditors and advisors on handling this. Once we have clarity, we’ll check and make changes if required.
We’re currently not adjusting the FMV (closing price of 31 Jan 2018) in the Console Tax PnL.
Thanks for your thoughtful response @TheGouda. I’m glad to hear that Zerodha is “checking with our auditors and advisors on handling this”. Please bear with me, Mr ArunGouda, as you read my follow-up!
Let’s say I buy 1 share of company X in 2016 for ₹2. 2018 FMV is ₹4. Today’s price is ₹8. I sell the share. Using grandfathering, the LTCG is ₹4.
Instead let’s say, one month ago, the company split shares 2 for 1. So now I have 2 shares. Acquisition cost goes from ₹2 to ₹1. Let’s assume market conditions have not changed for the company and so today’s stock price is ₹4 per split share (still ₹8 for both my shares). I sell them at ₹4 per share. If FMV is not correspondingly decreased, using grandfathering, the LTCG per share is 0!
As you can see, the above is “unfair” to the tax authorities. It’s also easy to come up with a different scenario which is “unfair” to the me (the stock owner). The only tax neutral approach would be to halve the FMV in the 2-for-1 (or any split) case.
Hasn’t CBDT issued guidance for corporate actions like the above, to be used when IT Returns are filed?
The demerger case is more interesting, as you point out by asking “Whether or not to adjust the remaining 4.62% to the child company. If the answer is yes, how? Since it was not listed in 2018, is it appropriate to show it as FMV etc?.”.
I thought the child company shares would get the same date of acquistion as the original shares with a cost of acquisition equal to 4.62 of the original cost? Assuming that’s going to be done, would it be appropriate to create a “virtual” entry in the FMV table for the child company for the remaining 4.62% of the FMV? Which answers your (possibly rehetorical) question about what to do the “remaining 4.62%” of the FMV - that way the stock-owner does not lose out!
Of course, going forward two companies may have very different trajectories and so this may end up being “unfair” to one of the two parties! One could argue, it may make sense to not change the FMV for Reliance (given that the ratio of the split is 95.38 to 4.62 and the very substantial increase in the price of Reliance from the FMV date) and let the customer claim the full FMV value on the Reliance side.
Russell
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Fair point @Russell
None that we’re aware of, which is precisely why we’re checking with our auditors.
The child company does get the same date of acquisition as the parent company in case of demerger. But we’re not sure creating FMV based on the parent company’s FMV is the right approach. We’ll update once we have clarity on this.
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Thanks for the response on Independence Day, @TheGouda. I appreciate being able to convey my thoughts directly to someone “in the loop”.
I’m a little surprised that there has been no CBDT guidance on this. I assumed stock splits affected the FMV and was curious how the demerger woud affect the FMV. It’s been over 5 years since 31 Jan 2018 and there have been numerous stock splits since then. If nothing has been done for the FMV in those cases it may be best to let sleeping dogs lie.
News says JFSL to list on 21-Aug, ie. next week
Yes, BSE has released a circular.
Trading Members of the Exchange are hereby informed that effective from Monday, August 21, 2023, the equity shares of Jio Financial Services Ltd (Formerly known as Reliance Strategic Investments Limited) shall be listed and admitted to dealings on the Exchange.
If you have received the shares of Jio Financial Services shares in Zerodha demat account, the buy price will be adjusted as per the cost of acquisition released by the company.
What all companies are under the Jio Financial services?
Is Jio mobile, internet a part of it?
A company with a net income of 414 crore last quarter is valued at 166000 crore??
nice.
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I am sure Adani companies are also in the same levels for somewhat similar reasons. but FIIs are throwing money at it like there is no tomorrow.
Jio Financial Services is listing on the exchanges today under the trading symbol “JIOFIN”.
The shares of JIOFIN will be traded under the trade-to-trade (T2T) category. This is because stocks listing after demerger are compulsorily traded under the T2T for 10 days. You can check the circular here.
This means if you buy shares of JIOFIN today, you can sell only once the shares are credited to your account. The settlement happens on T+1 day. Additionally, intraday and BTST (Buy Today Sell Tomorrow) trades aren’t allowed. Learn more here.
How do I know whether a stock is settled on a T2T basis?
There are a couple of ways;
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NSE adds a “BE” tag in front of the trading symbol for stocks trading in the T2T.
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On Kite, you will see a nudge if the stock is in T2T.
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It’s been more than three days, still it is a part of NIFTY50 as I can see it in NIFTY50 index. If so then what is it’s weightage in the index?
At time of listing it was around 200-250pts i think in Nifty.
Anyway, looks like it has begun trading today. 22Cr volume absorbed all the sellers in LC.
Since JIOFIN hit a lower circuit on the first two trading days, the deadline to remove it from the index was extended by another 3 days. As explained in the post shared above.
Not exactly sure about the weightage. From whatever I read, it was around 1%.
sir i am holding jfsl shares in 100 quantity… kya hum unn shares ko kabhi sell nahi kar sakte???
jaise ke abhi apne bataya ke jfsl ko nse se remove kar rahe hai… toh kya hum hamare shares nahi sell kar sakte
No restriction on Buy or Sell. Just remove from Index
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hello sir.
i had bought reliance share at thier ipo and have never touched them.
when the jio demerger happened i converted the reliance share to digital platform on zerodha and same way i recieved my jiofin share on zerodha ,.
now as these shares have been transfered from physical formate i am asked to enter the avg price of buy and i am confused to what should i wright in the avg buy price of reliance and jio,… can you please help?
reliance holding form ipo time damm,you must be rich.
Have explained the average price calculation above. That should help you.
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