New Rules for Buybacks: Section 46A Capital Gains Calculations Change for Shareholders Starting October 2024

Section 46A addresses capital gains for shareholders when a company purchases its own shares or specified securities. The capital gain is calculated as the difference between the acquisition cost and the consideration received. Section 46A does not apply to the buyback of unlisted shares due to Sections 115QA and 10(34A). For listed shares, there are no deemed dividends or tax implications for the company. For shareholders, the buyback amount is the sales price, and acquisition cost is considered for capital gains calculation. From October 1, 2024, the consideration for buybacks will be deemed nil for Section 46A purposes. Specified securities include employee stock options and other government-notified securities.