Buyback Tax Change: Relief for Investors, Not New Levy, Says Revenue Secretary
Economy 2
M
Moneycontrol•01-02-2026, 18:04
Buyback Tax Change: Relief for Investors, Not New Levy, Says Revenue Secretary
- •Revenue Secretary Arvind Shrivastava clarified that the Budget 2026 proposal on share buyback taxation is a relief for most shareholders, not an additional tax.
- •The revised framework taxes buyback proceeds as capital gains, benefiting non-promoter shareholders with a long-term tax rate of 12.5 percent.
- •The change corrects an earlier anomaly where buyback proceeds were treated as dividend income, taxed at higher income tax rates for shareholders.
- •The policy aims to curb misuse by promoters who previously used buybacks for tax arbitrage over dividends, while keeping their tax burden broadly unchanged.
- •Tax experts confirm the move improves clarity and fairness, ensuring tax applies only to the real gain for minority shareholders.
Why It Matters: The new buyback tax framework offers significant relief to investors by taxing proceeds as capital gains.
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