Tata Motors Demerger Decoded: How TMCV and TMPV Share Price Split & What It Means for Your Taxes

The Big Split Everyone’s Talking About

Tata Motors has made headlines again this time not for a new car, but for a big corporate move. The automaker has officially completed its long-awaited demerger, separating its Passenger Vehicle (PV) and Commercial Vehicle (CV) businesses into two distinct listed companies Tata Motors Passenger Vehicles (TMPV) and Tata Motors Commercial Vehicles (TMCV).

For investors, this TMCV and TMPV Share Price split isn’t just about new tickers on the screen; it also changes how the cost of acquisition, FMV rule, and tax calculation will work. Let’s break it down in the simplest way possible.

Tata Motors Demerger Explained — What Happened?

On November 12, Tata Motors’ commercial vehicle arm TMCV made its debut on the NSE, opening at ₹335 per share — a solid 28.5% premium over its discovered price. This officially marks the completion of Tata Motors’ restructuring process.

Through this demerger, Tata Motors has effectively split its operations into two independent listed companies:

• TMPV → Focused on cars, SUVs, and electric vehicles.
• TMCV → Focused on trucks, buses, and heavy commercial vehicles.

This move aims to give both divisions freedom to operate, raise capital, and focus on growth independently.

For Tata Motors shareholders, this means their old shares now represent two separate entities, and that’s where taxation and cost allocation come in.

What It Means for Shareholders

If you owned Tata Motors shares before the demerger, you now hold shares in both TMPV and TMCV. But how do you decide what each one “cost” you for tax purposes?

That’s where the Income Tax Act steps in. According to Section 2(19AA) and Section 47, when a company undergoes a demerger, the cost of acquisition of the original shares must be split proportionally between the two resulting companies.

So if you bought Tata Motors shares years ago, the total cost you paid now needs to be divided between your TMPV and TMCV shares.

The Formula: How the Cost Splits Between PV and CV Shares

As explained by Abheet Sachdeva, Partner at Nangia Group, the tax law says the original cost of your Tata Motors shares should be apportioned based on asset values.

Here’s the simple version of the formula:

Cost split = (Net book value of assets transferred) / (Net worth of the company before demerger)

For example:
If Tata Motors’ total net worth before demerger was 100 units and assets worth 40 units moved to the new company (TMCV), then 40% of your original cost is assigned to TMCV, and the remaining 60% stays with TMPV.

So if you bought ₹1 lakh worth of Tata Motors shares originally:

• ₹60,000 becomes your cost for TMPV shares
• ₹40,000 becomes your cost for TMCV shares

This proportion is what you’ll use later to calculate capital gains when you sell either one.

TMCV & TMPV Share Price Performance After Listing

The stock market’s reaction has been energetic.

• TMPV share price continues to trade strong on investor optimism about Tata’s EV business, particularly with the growing success of Nexon EV and Tiago EV.
• TMCV, on the other hand, attracted attention from long-term investors and mutual funds betting on India’s infrastructure boom and the rebound in commercial vehicle demand.

While TMPV represents the brand’s consumer appeal, TMCV reflects India’s logistics and transport backbone — both vital but distinct growth stories.

The 2018 FMV Rule — Grandfathering Explained in Simple Words

Now let’s decode the complicated bit — the “grandfathering rule” introduced in 2018.

When the government changed capital gains tax rules in 2018, they allowed investors to use the Fair Market Value (FMV) of shares as of January 31, 2018, as the purchase price — to protect old investors from sudden tax shocks.

But here’s the twist:

• TMPV shares existed before 2018 as part of Tata Motors, so they may qualify for the FMV rule.
• TMCV shares did not exist on that date, since the demerger happened in 2025.

That means you cannot directly use the FMV benefit for TMCV shares. Instead, you apply the proportionate cost of acquisition rule mentioned above.

Expert Views on Tax Implications

Tax experts like Abheet Sachdeva clarify that even though TMCV shares are “new”, your total investment cost is not reset. It simply gets split between TMPV and TMCV in the ratio determined by the demerger valuation.

The good news?
The demerger itself is tax-neutral. You don’t pay any tax when new shares are issued to you.

However, when you sell either TMPV or TMCV shares, your capital gains will be calculated based on:

1. The split cost of acquisition; and
2. The original purchase date of Tata Motors shares — which continues as your holding period.

So, if you bought Tata Motors shares 5 years ago, that same holding period applies to both TMPV and TMCV.

Why Tata Motors Opted for Demerger

Tata Motors’ management believes separating the businesses will:

• Simplify operations
• Improve decision-making
• Attract more focused investors

The PV business (TMPV) has been on an electric growth trajectory, especially with the Tata.ev brand gaining strong traction.
Meanwhile, the CV business (TMCV) remains India’s largest truck and bus maker, with renewed growth post-COVID and a focus on cleaner fuels.

This demerger helps both entities raise capital independently, form strategic alliances, and compete better in their respective markets.

What Investors Should Do Now

If you’re holding Tata Motors shares:

1. Don’t panic. You’ll automatically receive TMCV shares in your demat account.
2. Check the allocation ratio (announced by the company) to know how much cost applies to each share.
3. Update your records for capital gains calculation later.
4. Keep an eye on TMPV share price and TMCV performance in the coming months.

Quick Summary of the Key Rules

Why This Matters

This isn’t just a structural change for Tata Motors; it’s a lesson in corporate finance for retail investors.
Understanding the cost of acquisition and FMV rule helps you avoid tax mistakes later.

So next time you see a demerger — whether it’s Tata, Reliance, or another giant — you’ll know how your shares (and taxes) split.

The Road Ahead: What’s Next for TMPV and TMCV

Both Tata Motors arms have clear growth paths:

• TMPV will focus on electric mobility, SUVs, and expanding its EV charging ecosystem.
• TMCV plans to lead the next wave of commercial innovation with cleaner fuel tech and export expansion.

Analysts expect both entities to unlock shareholder value in the long term. Investors are advised to stay patient and treat the demerger as a value-creation move, not a short-term volatility event.

Stay tuned for more updates on TMPV share price, TMCV performance, and tax-related insights on future corporate restructurings.

The Tata Motors demerger is more than a corporate reorganization — it’s a clear step toward specialization, growth, and transparency.
For investors, understanding the TMPV–TMCV cost split, tax implications, and FMV rule can make a big difference in long-term returns.

As Tata Motors accelerates into its new phase, the split might just be the start of a bigger success story.

Get the latest updates on Global India Broadcast News your trusted digital destination for breaking headlines, entertainment buzz, lifestyle trends, health and fitness tips, technology insights, business developments, political updates, world news, and exclusive interviews from India and around the globe.

Related Post – Tata Motors Demerger: Tata Motors Commercial Vehicles Shares List at 28% Premium; TMLCV Debut Ignites Market Buzz and MoneyControl