Say I have 14 shares @2250 for more than a year and got 7 shares as bonus (after 365 days since last buy date), post which the avg price went @1500.
Consider, the stock is now trading @1250.
The company announces buyback @1750.
Though buybacks are not taxable at the investors side , I just wanted some clarity.
So if I tender and say 5 shares gets accepted, from taxation perspective (and checking whether tendering makes sense), will it be a loss (1750 - 2250= -500) or will it be a profit (1750 - 1500 = 250)?
Since the capital gain from the buyback is not liable to tax, any loss incurred from the buyback is also not available for set-off/carry-forward purposes.
Yes, you can execute the transaction in order to minimize your tax burden only if there is a capital loss against the pre bonus shares held by you as gains on buyback of shares is exempt from taxation.