The Deemed Dividend: Investors who purchased Tata Motor DVR shares recently for a 3-4% arbitrage opportunity at approximately Rs. 700 per share are now facing a 30% tax liability on the Rs. 200 Deemed Dividend ( assumed as per XL sheet shared by tata motor), translating to Rs. 60 per share as Dividend Tax. Ironically, this tax burden arises without the investors actually receiving the dividend. Doesn't this constitute a substantial loss for DVR buyers? Moreover, individuals who sold Tata Motors shares and subsequently purchased DVR shares would have already incurred capital gains tax. Now, they will face additional capital gains tax during the transition from DVR to Tata Motors, coupled with the Deemed Dividend tax. It raises questions about the legitimacy of this tax implication. Ultimately, where does the so-called Deemed Dividend go? The company retains it, yet investors are solely responsible for paying tax.
The Deemed Dividend: Investors who purchased Tata Motor DVR shares recently for a 3-4% arbitrage opportunity at approximately Rs. 700 per share are now facing a 30% tax liability on the Rs. 200 Deemed Dividend ( assumed as per XL sheet shared by tata motor), translating to Rs. 60 per share as Dividend Tax. Ironically, this tax burden arises without the investors actually receiving the dividend. Doesn't this constitute a substantial loss for DVR buyers?
Moreover, individuals who sold Tata Motors shares and subsequently purchased DVR shares would have already incurred capital gains tax. Now, they will face additional capital gains tax during the transition from DVR to Tata Motors, coupled with the Deemed Dividend tax. It raises questions about the legitimacy of this tax implication.
Ultimately, where does the so-called Deemed Dividend go? The company retains it, yet investors are solely responsible for paying tax.