Income Tax Dept Clarifies Share Buyback Tax Changes, Benefits Small Investors
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News18•01-02-2026, 23:09
Income Tax Dept Clarifies Share Buyback Tax Changes, Benefits Small Investors
- •Union Budget 2026 changes share buyback taxation: now treated as capital gain instead of dividend.
- •The Income Tax Department clarified the new rules on X, aiming to simplify the tax system.
- •Previously, buybacks were taxed as dividends, and share extinguishment as capital loss, disadvantaging small investors.
- •New rules tax long-term capital gains at 12.5% and short-term at 20% for listed shares; unlisted shares taxed by slab.
- •Strict rules for promoters: domestic companies face 22% tax, others 30% on buyback gains to prevent tax avoidance.
Why It Matters: New share buyback tax rules in Budget 2026 simplify taxation, benefiting small investors and ensuring fairness.
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