For investors, a key question is how the original purchase price is split for calculating LTCG tax after a company demerges.

Holding period remains unchanged

Tax experts clarify that a demerger does not reset the holding period of shares. This means your original purchase date of Vedanta shares continues to apply even after you receive shares in the new companies.

"Capital gains on the sale of shares are calculated based on the holding period and the date of acquisition of shares. If someone receives shares as part of a merger, or demerger, the holding period is counted from the date of purchase of shares," said Mumbai-based tax and investment expert Balwant Jain.

This means that if an investor sells shares after holding them for more than one year, the gains will qualify as long-term capital gains. However, if the holding period is less than one year, the gains will be treated as short-term capital gains.

How the cost of acquisition is split

As per Vedanta's listing documents , the cost is allocated as follows:

Vedanta has renamed two demerged businesses as part of its restructuring. Malco Energy Limited has been renamed Vedanta Oil and Gas Limited effective June 9, 2026, while Talwandi Sabo Power Limited was renamed Vedanta Power Limited on June 3 after ROC approval. ( Read more)

Let us try to understand this with an example. If your total investment in Vedanta was ₹2,50,000 for 500 shares, the cost would now be split like this:

This split cost will be used later when you sell any of these shares to calculate capital gains.

How LTCG is calculated

For listed equity shares, the formula remains:

LTCG = Sale price - (cost of acquisition + expenses on transfer)

To understand the LTCG calculation, consider only one of the four demerged entities, Vedanta Aluminium Metal Ltd, as an example. The tax calculation for the other entities will differ because each has a different cost of acquisition based on the prescribed allocation ratio.

If an investor received 500 shares of Vedanta Aluminium Metal after the demerger and sold them at its listing price of ₹527 per share:

Sale value = 500 × ₹527 = ₹2,63,500

Cost of acquisition = ₹17,875

LTCG = ₹2,63,500 - ₹17,875 = ₹2,45,625

Less: LTCG exemption available per financial year (₹1,25,000)

Taxable LTCG : ₹1,20,625 LTCG Tax @ 12.5%: ₹15,078

At a 12.5% LTCG tax rate, the tax would be approximately ₹15,078.

The above assumes the investor has not already used the ₹1.25 lakh annual LTCG exemption on other equity or equity-oriented investments during the same financial year.

So, your taxable gain depends heavily on how the original cost is allocated across the new companies.

Shares of Vedanta Aluminium Metal began trading at ₹527, Vedanta Power listed at ₹41.30, Vedanta Oil and Gas started trading at ₹39, Vedanta Iron and Steel shares listed at ₹22.25 on the BSE.

All these four demerged firms got listed on the NSE also.

Vedanta Aluminium Metal started trading at ₹522, Vedanta Power listed at ₹41.80, Vedanta Oil and Gas at ₹38 and Vedanta Iron and Steel at ₹20 on the NSE.

The newly listed entities began trading on both NSE and BSE following the approved demerger scheme, which was sanctioned by the National Company Law Tribunal in December 2025. Under the 1:1 ratio, shareholders received one share in each demerged entity for every Vedanta share held.

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Disclaimer: The views and opinions expressed above are those of respective experts/commentators and do not reflect the views of Upstox. The above Q&A is only for informational purposes and should not be considered investment or tax advice from Upstox. Please consult a tax expert for your complex tax problems.