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Buy back of listed shares, exempt to promotors ?

Hiteshkotharica (ACCOUNTANT) (29 Points)

13 June 2016

Dear sir, If Listed company buy back shares of Promotors. is it exempt under any section of the income tax Act to the Promotors ?

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3 Replies

CA MANISH BINDAL (CHARTERED ACCOUNTANT ) (535 Points)
Replied 13 June 2016

If they are listed shares than there will be no exemption under section 46A to any shareholder

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mohammad rasool baig (Management Consultant) (1026 Points)
Replied 16 June 2016

Long term gains on shares are exempted. Please check whether it is long term capital gains.

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 16 June 2016

Where a shareholder or a holder of other specified securities receives any consideration from any company for purchase of its own shares or other specified securities held by such shareholder or holder of other specified securities, then, subject to the provisions of section 48, the difference between the cost of acquisition and the value of consideration received by the shareholder or the holder of other specified securities, as the case may be, shall be deemed to be the capital gains arising to such shareholder or the holder of other specified securities, as the case may be, in the year in which such shares or other specified securities were purchased by the company.

Further, as per section 10(34A) income arising to shareholder on buy back by such unlisted domestic company shallc be exempt in hands of shareholder.

provided further, that unlisted domestic company distributing income by way of buy back shall be liable to pay additional income tax @ 22.66% of such distributed income.

Hope this will help u

Harshit

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