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tax treatment of reliance off shoots RCAPvl, RCVL, RENVL and RNRL

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Old 26th March 2006, 08:41 PM
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Default tax treatment of reliance off shoots RCAPvl, RCVL, RENVL and RNRL

I have purchased Reliance more than a few years back. I want to know how the sale proceeds of above shares will be treated.
1)what will be the purchase price
2) If reliance shares are more than one year old, gains from these shares will be long term or not?
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Old 26th March 2006, 09:04 PM
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Default Re: tax treatment of reliance off shoots RCAPvl, RCVL, RENVL and RNRL

Quote:
Originally Posted by lvgandhi
I have purchased Reliance more than a few years back. I want to know how the sale proceeds of above shares will be treated.
1)what will be the purchase price?
The purchase price of shares of demerged company is calculated by dividing the purchase price just before demerger with the swap ratio. For example, if the purchase price of one share of Company X (after adjustment of Bonus & Rights) at the time of its demerger into X & X1 was Rs. 100/- and a shareholder receives 3 shares of X1 for 1 share in X, the purchase price of one share of X1 will be treated as Rs. 33.33. However, further adjustments for rights and bonus issues might be required if those are received by the shareholder after demerger but before he sells the shares in the market.

Quote:
2) If reliance shares are more than one year old, gains from these shares will be long term or not?
The period of holding is calculated from the time shares of the Old company were purchased. As you are holding reliance shares for more than 1 year, the gains will be Long Term Capital Gains.

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Old 26th March 2006, 11:58 PM
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Default Re: tax treatment of reliance off shoots RCAPvl, RCVL, RENVL and RNRL

Thanks for the reply.
Though now I understand from your reply that for me it will be LTCG and hence no tax, What the purchase price for RCAPVL,RCVL,RENVL and RNRL. Is it calculated and published
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Old 27th March 2006, 12:14 AM
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Default Re: tax treatment of reliance off shoots RCAPvl, RCVL, RENVL and RNRL

Quote:
Originally Posted by lvgandhi
Thanks for the reply.
Though now I understand from your reply that for me it will be LTCG and hence no tax, What the purchase price for RCAPVL,RCVL,RENVL and RNRL. Is it calculated and published
The purchase price will be different for different investors as they must have bought RIL on different prices. Swap ratio has been published though and I guess you must be aware of it as you received shares in exchange.

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