ITC Provides Revised Cost Apportionment Details Post Demerger of Hotels Business

Kolkata, January 28, 2025 – ITC Limited has issued a revised communication to its shareholders regarding the apportionment of the cost of acquisition of its Ordinary Shares and the Equity Shares of ITC Hotels Limited (ITCHL) following the demerger of its Hotels Business into ITCHL. The revision corrects the total cost of acquisition for shareholders holding 100 shares of ITCHL, updating it to ₹54,040/- instead of the previously mentioned ₹50,040/-.

Key Updates on the Demerger and Share Allocation​

• The demerger, sanctioned by the National Company Law Tribunal (NCLT), Kolkata Bench, became effective on January 1, 2025.
• As part of the arrangement:
  • ITCHL issued one equity share for every 10 ITC shares held.
  • A total of 125.11 crore equity shares of ₹ 1 each were allotted to eligible ITC shareholders.

Revised Cost Apportionment Ratio​

Shareholders need to apportion the total cost of acquisition of ITC shares between ITC and ITCHL based on the following ratios:

Illustration for Shareholders​

If a shareholder purchased 1,000 ITC shares at ₹400 per share (total cost of ₹4,00,000), the revised allocation will be:

• ₹3,45,960/- (86.49%) as the cost of 1,000 ITC shares.
• ₹54,040/- (13.51%) as the cost of 100 ITCHL shares allotted after the demerger.

Tax Implications​

As per Section 47(vid) of the Income-tax Act, 1961, the allotment of ITCHL equity shares under the Scheme will not be regarded as a transfer. Additionally, the original date of acquisition of ITC shares will be treated as the acquisition date for ITCHL shares, per Explanation 1(i)(g) to Section 2(42A).

Guidance for Shareholders​

ITC advises shareholders to consult their tax consultants or advisors to understand the specific implications of the cost apportionment and tax treatment for their cases.