Team SKM,
Tata Motors has announced the final cost allocation ratio for shareholders following the demerger of its passenger-vehicle and commercial-vehicle businesses. Investors will now attribute 68.85% of their original investment cost to Tata Motors Passenger Vehicles Ltd (TMPVL) and 31.15% to Tata Motors Ltd (TMCV), the newly listed commercial-vehicles company.
The demerger took effect on 1 October 2025, with 14 October as the record date. Shares of TMCV were listed on the BSE and NSE on 12 November.
Illustration of Cost Split
A shareholder holding 1,000 Tata Motors shares purchased at ₹500 each before the demerger, representing a total investment of ₹5,00,000, will now apportion costs as follows:
– ₹3,44,250 (68.85%) will be attributed to TMPVL
– ₹1,55,750 (31.15%) will be attributed to TMCV
These proportions will be used to calculate future capital gains or losses on both holdings.
No Change in Holding Period
The demerger will not be treated as a transfer under Section 47(vid) of the Income-Tax Act, 1961. The date of acquisition for TMCV shares will remain the same as that of the original Tata Motors shares. The company said the allocation is based on the netbook value of assets transferred between the two entities immediately before the split.
Tax Treatment and Outlook
Under the terms of the demerger, shareholders received one TMCV share for every one TMPVL share held.
The restructured entities are expected to pursue independent growth paths, with TMPVL focusing on premium passenger cars and electric mobility, and TMCV consolidating its position in trucks, buses, and commercial fleets.
Market participants expect the separation to improve business transparency, simplify valuation, and unlock shareholder value over time, even as near-term volatility remains likely across both counters.