Buy back of shares

Hi,

The tax on buyback of shares shall be calculated as follows

(i.e. option 1 or option 2 whichever is lower)

Option 1: From the sale consideration deduct the cost and on the balancing amount calculate 10%

Option 2: From the sale consideration deduct the indexed cost and on the balancing amount calculate 20%

As per finance Act,2013, A new Chapter XII-DA is inserted, which talks about special Provisions relating to tax on Distributed Income of Domestic Company For Buy Back of Shares.  

New Section 115QA which states that company will have to pay tax on distributed Income.

As per explanation to the section>   Distributed Income= Consideration Paid on Buy Back LESS amount received at the Time of Issue of Shares    

Can anyone clarify that if shares were originally issued at Premiun , will that amount will also be reduced from Consideration paid on Buy Back.

Please explain with Example.