New Delhi: Finance Minister Nirmala Sitharaman announced in the Union Budget 2024 presentation that share buybacks will now be taxed in the hands of shareholders, similar to dividends, effective from October 1. This move is expected to increase the tax burden on investors.
Additionally, the cost paid by the shareholder to acquire these shares will be taken into account for calculating capital gains or losses.
Sitharaman stated, “For reasons of equity, I propose to tax income received on the buyback of shares in the hands of the recipient.”
Experts anticipate that this change may lead to a decline in the number of buybacks as it increases the tax burden on investors.
Overall, this adjustment aims to bring parity between tax implications on dividends and buybacks and is set to take effect on October 1, 2024.