You will be issued new ordinary shares of TATA Motors, and the price on 29th Aug will become your new cost of acquisition.
Your gains from this conversion can be broken into two parts:
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Partly as Deemed divided (tax at slab rates)
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Partly as Capital Gains (special rates)
I will take the closing price (~ ₹1,122) of Tata Motors as on 29th Aug for explaining the below calculations.
Assuming i bought 100 DVR shares at ₹300, my cost of acquisition is ₹30,000.
Now, the price as on 29th Aug will be used to determine the sale consideration.
Since the ratio is 7:10, I will get 70 ordinary shares for the 100 DVR shares.
Assuming ₹1,122 is used for the final calculation, the Sale consideration will be = (₹1,122 x 70) = ₹78,540
Normally, we will take the (Sale price - Purchase price ) to calculate the capital gains.
This would be (₹78,540 - ₹30,000) = ₹48,540
But here, since the deemed divided concept is involved, the total gains will be broken into two.
The actual deemed divided will be known only later, for now i will consider the ₹200 per share as the deemed divided portion.
So the deemed dividend for 100 DVR shares will be (100 x ₹200) = ₹20,000
In our income tax return, we will show ₹20,000 as Deemed dividend under IFOS, and the remaining ₹28,540 as capital gains.
I think for this, we need to take the net consideration after reducing the deemed dividend as our final consideration , for reporting in the ITR for under capital gains.
So in this example, you would have to report ₹58,540 as the sale consideration instead of ₹78,540 and ₹30,000 would be reported as the cost, resulting in gains of ₹28,540.