Hindustan Unilever Limited (HUL) announced guidance on the cost apportionment for the demerger of Kwality Wall’s (India) Limited (KWIL). Shareholders will receive KWIL shares, and the cost of acquisition needs to be apportioned between HUL and KWIL. This guidance details the ratio for allocating the cost of HUL shares post the demerger, with 98.09% allocated to HUL and 1.91% to KWIL.
Illustrative Example
For instance, if a shareholder purchased 1,000 HUL shares at Rs 400/- per share, the total cost of acquisition would be Rs 4,00,000/-. After the KWIL share allotment, this cost would be apportioned as follows:
- Cost allocated to KWIL shares: Rs 7,640/- (1.91% of Rs 4,00,000/-)
- Cost allocated to HUL shares: Rs 3,92,360/- (Rs 4,00,000/- less Rs 7,640/-)
Important Clarifications
The allotment of KWIL shares is not considered a transfer under Section 47(vid) of the Income Tax Act. Additionally, the date of acquisition for HUL shares will be deemed the date of acquisition for KWIL shares, according to Section 2(42A) of the Act.
Disclaimer: This information is for general guidance only. Shareholders are advised to consult their tax advisors for specific tax implications.
Source: BSE
