The strong listing was followed by further gains, as the stock touched Rs 345 on the NSE during the day, reflecting investor enthusiasm for India’s largest truck and bus manufacturer.
This listing comes after the recent corporate restructuring of Tata Motors, under which its commercial and passenger vehicle businesses were split into two distinct entities. As part of this exercise, Tata Motors Commercial Vehicles Ltd (TMLCV) was formed and listed separately, while Tata Motors Passenger Vehicles Ltd (TMLPV) now holds the passenger vehicles business.
Understanding the restructuring and what you now hold
Under the approved Composite Scheme of Arrangement, the following changes were made:
- The Commercial Vehicles business was transferred to a new company, now called Tata Motors Limited (formerly TMLCV).
- The Passenger Vehicles business was merged into what was formerly Tata Motors, which has now been renamed Tata Motors Passenger Vehicles Limited (TMLPV).
If you were a shareholder of Tata Motors as of the record date (October 14, 2025), you now hold:
- Shares of Tata Motors Limited (Commercial Vehicles arm, i.e., TMLCV), and
- Shares of Tata Motors Passenger Vehicles Limited (TMLPV)
You received 1 share of TMLCV for every 1 share of Tata Motors you held, without needing to apply or take any further action.
What is the cost of acquisition, and why does it matter?
The cost of acquisition is essentially the price you paid to purchase your shares. It’s used to calculate capital gains if and when you sell your shares in the future. For example:
- If you bought a share for Rs 400 and later sell it for Rs 500, the gain of Rs 100 is considered your capital gain.
- For tax purposes, knowing how much of your original investment belongs to each of the two companies post-demerger helps you report your profits or losses accurately.
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How to calculate the new cost of acquisition post-demerger?
After the demerger, the total cost of your original Tata Motors shares must be split between the two companies — the Commercial Vehicles business and the Passenger Vehicles business.
As per the company’s filing, the split is as follows:
- 31.15% of your original cost will now be attributed to Tata Motors Limited (Commercial Vehicles)
- 68.85% will be attributed to Tata Motors Passenger Vehicles Limited
For example, let’s say you bought 1,000 shares of Tata Motors at Rs 400 each. Your total investment was Rs 4,00,000.
Now, post-demerger:
- You will receive 1,000 shares of Tata Motors Ltd (CV) at a cost of Rs 124.60 per share (i.e., Rs 1,24,600 = 31.15% of Rs 4,00,000)
- You will continue to hold 1,000 shares of Tata Motors PV at a cost of Rs 275.40 per share (i.e., Rs 2,75,400 = 68.85% of Rs 4,00,000)
This breakdown is important if you decide to sell either set of shares in the future, as the capital gain/loss will depend on this revised cost structure.
It should be noted that, as per Indian tax rules, this kind of share issuance through a demerger is not treated as a transfer, so no immediate capital gains tax is triggered. Also, for tax purposes, the date of acquisition for the new TMLCV shares will be the same as the original Tata Motors shares you held earlier.
The revised cost of acquisition helps ensure that your capital gains calculations are accurate, especially when filing income tax returns.
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If you held Tata Motors shares as of October 14, 2025, you are now an investor in two distinct businesses — commercial and passenger vehicles — and it’s important to know how your original investment is now divided between them.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)