Quick Summary
Tax on distributed income of domestic company for buy-back of shares Special provisions relating to tax on distributed income of a domestic company from buy-back of shares were introduced by Finance Act, 2013, in line with the then schema of dividend distribution tax. Prior to the amendments made by the Finance Act, 2020, a company had to pay dividend distribution tax (DDT), on the distributed profits by way of dividends in addition to the income-tax chargeable in respect of the total income fo
Daily Limit Reached
You have reached your daily limit of 2 Free News
Subscribe to CCI PRO for unlimited access
Why Upgrade to CCI PRO?
- No Ads
- WhatsApp Community
- Daily E-Newsletter
- Unlimited News Access
- Profile Visitors
- Link Social Profiles
- Featured Job Posts
- Pro Badge
- Expert GST Guidance
- Unlimited Forum Replies
- Download Content in PDF
1 Year PLAN
1999
(Excl. of GST ₹359)
BEST VALUE
2 Years PLAN
3499
(Excl. of GST ₹629)
3 Months PLAN
999
(Excl. of GST ₹179)
View all CCI PRO benfits
Already a PRO member? Login here for an ad-free experience.
FAQ :
These amendments will take effect from 1st October 2024 and will apply to any buy-back of shares that takes place on or after this date.
The sum paid by a domestic company for the purchase of its own shares will be treated as a dividend in the hands of the shareholders who receive the payment. This will be charged to income tax at the applicable rates.
No, no deduction for expenses shall be available against such dividend income when determining the income from other sources.
The cost of acquisition of the shares which have been bought back would generate a capital loss in the hands of the shareholder as these assets have been extinguished. The deemed value of consideration for these shares for the purpose of computing capital loss will be nil.
Yes, you will be entitled to claim your original cost of acquisition of all shares. The capital loss on buy-back can be carried forward and subsequently set off against consideration received on sale of other shares, thereby reducing capital gains.
CAclubindia
