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As far as money received in respect of fractional entitlement of shares is concerned, since the fractional shares are not sold by you and as such STT is not paid in respect of such fractional shares, the same cannot be taxed under Section 112A which is applicable if STT has been paid.
Shares issued by a corporation that equal less than one full share of stock. Fractional shares are often issued in connection with stock-for-stock mergers, stock dividends, reverse stock splits, and other similar corporate actions.
Related Content. The fractions of shares to which shareholders are entitled on a rights issue or open offer when their entitlement is not a whole number.
In this case, the individual would only receive 5 shares (5*5 = 25) of the new company XYZ, leaving them with 4 shares of the old company ABC (29-25). As a result, the individual would be entitled to a fractional share of 0.8 (4 shares / 5 = 0.8) of XYZ.
What is a Fractional Share Right? Put very simply, when an investor doesn't have enough money to buy a whole share, Fractional Share Rights (FSRs) give them the ability to invest whatever that sum of money is, in a fraction of that share / security.