Tata Motors Demerger Complete: Selling Shares now? Tax Expert Warns Of CV-Gain, PV-Loss Twist

Tata Motors Demerger: Tata Motors Limited, the commercial arm of the automobile, has begun trading on November 12. Shares of Tata Motors Commercial Vehicles Ltd (TMCVL) made their stock market debut at Rs 335 apiece on NSE, a premium of 28.48% to its implied value of Rs 260.75 per share. Shares dropped to end at Rs 317.60 apiece.

The listing follows the Tata Motors demerger, which officially came into effect on October 1, 2025. Under the plan, shareholders received one share of Tata Motors Commercial Vehicles Ltd for every share held in Tata Motors as of the record date, October 14, 2025.

Post-restructuring, the Commercial Vehicles (CV) business has been renamed Tata Motors, while the Passenger Vehicles (PV), Electric Vehicles (EVs), and Jaguar

Land Rover (JLR) businesses now operate under Tata Motors Passenger Vehicles Ltd (TMPV), which is already listed as a separate entity.

The good news is that receiving these new shares is not taxable. Since the split took place under a court-approved demerger, Section 47 of the Income Tax Act treats this as “tax neutral”, meaning there is no transfer and no tax is triggered at the time of allotment.

What Happens If You Sell These Shares?

But, investors must know that these shares will be taxable if you sell them.

Sujit Bangar, the founder of taxbuddy.com, has explained the demerger taxation in his X post.

Tata Motors has officially declared the cost allocation ratio for the two new entities:

• 31.15% of your original cost goes to the CV company
• 68.85% goes to the PV company

This split must be followed exactly while calculating capital gains.

For example, an investor who originally bought 1,000 Tata Motors shares at Rs 660 each had a total cost of Rs 6,60,000. After applying the official ratio, the revised cost becomes:

• TMCV: Rs 2,05,590
• TMPV: Rs 4,54,410

If these shares are sold at the current market prices—Rs 318 for Tata Motors and Rs 391 for Tata Motors Passenger Vehicle—the investor ends up with:

• Gain of Rs 1,12,410 on the CV company
• Loss of Rs 63,410 on the PV company
• Net long-term gain: Rs 49,000

Tata Motors has 66,55,766 shareholders

They’ve completed a demerger and recently declared the cost of both companies

Before you rush to sell, you may have gains in the CV entity but a loss in the PV entity.

Here’s all that you need to know about your demerger taxation 👇🧵 pic.twitter.com/7fkCN8SQUs

— Sujit Bangar (@sujit_bangar) November 14, 2025

The original holding period of Tata Motors carries forward for both companies. This decides whether the gain is short-term or long-term.