How Are Gains From Share Buyback Offer Taxed In India?

Subscribe to GoodReturns
For Quick Alerts
For Daily Alerts

    A slew of share buyback offers are opened for investors by listed companies in which they tender their held shares to reap profits. Generally through a buyback offer, the company distributes its surplus cash to investors.

    So, here is the tax implication on gains realized in a share buyback offer for a shareholder:

    How Are Gains From Share Buyback Offer Taxed In India?

    Tax implication on share buyback gains for a resident-shareholder

    The tax liability for an investor depends on the fact whether the shares tendered in a buyback offer are of a listed or unlisted company.

    In case of a listed company

    For the shareholder, irrespective of the residential status, the gains qualify for capital gains tax implications except in the case when buyback tax is paid by the company as per Section 10(34A).

    - If shares are held for over 1 year

    The buyback of listed securities held for over a year with profits made on it is treated as long term capital gains and the same is exempted from tax liability in accordance with Section 10(38) of the Act if shares are bought back before March 31, 2017.

    In the other instance, when the buyback of shares is executed after the cut-off date specified above LTCG tax is levied.

    -If shares are held for less than 1 year

    The gains realized from share buyback if shares are held for less than a year are treated as STCG and the same would be taxed @ 16.22% including surcharge and cess.

    In case shares are held as stock-in trade

    So, after a buyback of such shares accrues gains for the investor, the same is taxed as business income.

    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more