Budget 2026–27 | Buyback tax back-and-forth opens new interpretational questions
Published on 05/02/2026 09:41 AM
Budget 2026–27 | Buyback tax back-and-forth opens new interpretational questionsThe Finance Bill, 2026 moves buybacks back into the capital-gains framework — good news for many non-promoter shareholders — while simultaneously introducing a promoter premium and fresh interpretational questions, note Globeview Advisors' Ameya Kunte and Chirag Chordia.By CNBCTV18February 5, 2026, 9:41:40 AM IST (Updated)For years, share buybacks were taxed as capital gains in the hands of shareholders. That changed in 2013, when a separate buyback tax was introduced and the tax incidence shifted from shareholders to the company. The regime swung again in October 2024. From 1 October 2024, buyback proceeds became taxable in the hands of shareholders as dividend income leading to a higher immediate tax cost (up to 35.88% for resident individuals). The cost of acquisition of extinguished shares was allowed as a capital loss. This is useful only if the shareholder had (or later earned) capital gains to set it off.Continue Reading with CNBC-TV18 Access MembershipPriority Access and Networking: CNBC-TV18's flagship events Interaction with CNBC-TV18's journalists Webinars & LIVE Q&As with India Inc. Leaders Exclusive CNBC-TV18 studio & newsroom tours Premium business insights, expert opinions & analysis Curated lifestyle privileges & offers