Capital gains on purchase by company of its own shares or other specified securities (Buy-Back of Shares)- (New) section 69 / (Old) Section 46A

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....g in Buy-back [Section 69(2)] This sub-section applies only when: • The company purchases its own shares or specified securities under Section 68 of the Companies Act, 2013 (buy-back provisions); and • The shareholder/security holder is a promoter. In such cases, tax liability comprises: • Normal capital gains tax under the Income-tax Act; plus • Additional income-tax at prescribed rates. Nature of Capital Gain Domestic Company Promoter Other Promoters Short-Term Capital Gain (STCG) referred to in Section 196 2% 10% Long-Term Capital Gain (LTCG) referred to in Section 197 or Section 198 9.5% 17.5% Meaning of Promoter  (a) in t....

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....s a shareholder, director or otherwise; or (c) in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act: Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity; or (d) a person who holds, directly or indirectly, more than 10% of the shareholding in the company; Meaning of "specified securities" "specified securities" includes employees' stock option or other securities as may be notified by the Central Government from time to time. Under Section 46A of the Income Tax Act, 1961 [ Upto 31.03.2026 ] Where a shareholder receives any consideration from any comp....

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....€¢ Capital gain = Full value of consideration - (Cost of acquisition + Cost of improvement + Transfer expenses). Year of Taxability: - Tax liability arises in the year the company executes the buy-back. NOTE: After introduction of Section 115QA and Section 10(34A); Section 46A shall not apply on buyback of Unlisted shares. TAX IMPLICATION IN HANDS OF THE COMPANY WHEN LISTED SHARES ARE BROUGHT BACK BY THE COMPANY 1. There will be no deemed dividend on buy back of shares under section 2(22). Consequently section 115-O shall not be attracted. 2. Section 115QA shall not be attracted since shares are listed. 3. No other tax implication in the hands of the company. TAX IMPLICATION IN HANDS O....