Taxation on selling Jio Financial Services

General
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JFS is scheduled to be listed on 21st Aug. I own Reliance Industries for more than 4 years now… If I sell JFS during the next few days… will this be considered as short-term or long-term capital gain… also what would be the cost price… zero ? @Quicko

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As rightly corrected by @Jason_Castelino , cost of acquisition of JFS will be 4.68% of your buy price of Reliance

The demerger will not be considered as an event of transfer for taxation purpose and therefore, tax will be applicable based on the initial date of purchase. That is 4 years in your case and therefore, LTCG will be applicable in case you choose to sell JFS.

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No. It will depend on your buy price and 4.68% percentage of that.
Like if I have bought reliance at 100 rupees some 30 years back, coa can’t be 133 for Jio. It is 4.68% percent of 100.

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Thanks Meher and Jason for the quick reply. Much appreciated.

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Hello @Ddude,

The gains on sale of JFS shares will be considered as LTCG as you held the shares originally for more than 12 months. The cost of acquisition will be 4.68% of the amount you paid to acquire the Reliance shares, which is basically the ratio in which the net assets of the company is demerged.

Hope this helps!

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Thanks @Quicko

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But what about grandfathering clause for LTCG ? Will my cost of acquisition of Reliance stock be closing price on 31th Jan 2018 ?

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Hey @Aj_Gl,

Yes, in this case, the grandfathering rule will be applicable. The original cost of acquisition will be proportionately allocated to the split shares for the calculation of LTCG.

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Thanks for quick reply.
That means Jio price of acquisition will be 4.68% of RIL’s price on 31-Jan-18 and rest will be RIL’s. Correct ?

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Hey @Aj_Gl,

Yes, your understanding is correct.

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Thanks.