- From 1 April 2026, buyback consideration received by shareholders is taxable under capital gains instead of being treated as a deemed dividend.
- Applicable STCG/LTCG provisions will apply based on the type and holding period of the shares.
- For eligible listed equity shares, the applicable capital gains tax rates and exemptions will apply.
- Promoter shareholders are subject to separate tax provisions: 22% for domestic company promoters and 30% for other promoters.
Tax Treatment Timeline: - Before 1 October 2024: Buyback tax was paid by the company.
- 1 October 2024 to 31 March 2026: Buyback was treated as a deemed dividend for shareholders.
- From 1 April 2026: Buyback is taxed under Capital Gains.
Note: Tax liability may vary based on the shareholder's status, type of shares, and holding period. Consult a tax advisor for individual tax implications.
Understand Buyback Taxation Learn about the tax treatment applicable to buyback proceeds and the changes effective from 1 April 2026.
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