Quick Summary
Finance Minister Nirmala Sitharaman in Lok Sabha on Wednesday has proposed a change in the Finance Bill 2026, where a flat 12% surcharge will apply on capital gains earned from share buybacks.
Here,
This means that whenever an investors sell their shares back to a company during a buyback, the profit they earn will now attract extra 12% charge on top of the normal tax.
Earlier,
The surcharge rates depends on the investor’s total income. Such as,
- Zero surcharge if income was less than Rs.50 lakh
- 10% surcharge for income between Rs.50 lakh and Rs.1 crore
- 15% surcharge for income More than Rs.1 Crore and below Rs.2 Crore
- 25% for more than Rs.2 Crore but below Rs.5 Crore
- 37% surcharge for above Rs.5 Crore
Impact
- Middle-income and small investors now may have to pay more tax on buyback gains than before.
- High-income investors could see a reduced burden.
In Short
Now, the government has removed this income-based system and introduced a uniform (i.e., flat) 12% surcharge will be added for everyone, regardless of income level.
FAQ :
The Finance Bill 2026 proposes a flat 12% surcharge on capital gains earned from share buybacks.
Previously, surcharge rates varied based on the investor's total income. Now, a uniform 12% surcharge applies to everyone, regardless of income.
Middle-income and small investors may have to pay more tax on their buyback gains under the new flat surcharge system.
High-income investors could potentially see a reduced tax burden on their buyback gains compared to the previous system.
The Finance Minister proposed this change in the Finance Bill 2026 on a Wednesday.
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