KPR Mill becomes the first company to withdraw its Rs 263.31-crore buyback proposal following the imposition of taxes on repurchase of shares by Indian companies. In the Budget 2019, presented on 5 July by FM Nirmala Sitharaman, an additional tax of 20 percent (plus surcharge and cess) in case of buyback of shares by listed companies was proposed, to discourage the practice of avoiding dividend distribution tax (DDT).

In a stock exchange filing to the stock exchanges, the company said, "We have today (Thursday) filed with SEBI our communication conveying that the increase in the amount of buyback obligation due to the tax proposal in the Finance Bill 2019 was neither contemplated nor prevailing at the time of the consideration and the approvals of the board and shareholders."

"We are not permitted to meet the buyback obligations beyond the amount approved by the Board of Directors and Shareholders of the Company and the same can also be effected only with the borrowed funds, which is prohibited by law. In the above circumstance, we are unable to file the 'Letter of Offer ' and go forward with the proposal, which has been intimated to Sebi," it further said.

On 10 June 2019, the textile manufacturer had informed the exchanges of its buyback plan.

However, in an interview with CNBC-TV18, JN Gupta, Former ED at SEBI said, that KPR Mill will have to approach capital market regulator for an exemption as, "once letter of offer is filed and public announcement made, buyback can't be withdrawn."

Shares of KPR Mill fell close to 3 percent in trade on Friday after the decision. It touched an intraday low of Rs 571.30 apiece on NSE.