Taxation on buyback offer

Taxation
1

Who has to pay the pay the tax on buyback offer? (both open market and tender offer)

I heard that the company has to pay the tax and not the shareholder (investor) is that true?

@Quicko

2

Buyback amount is tax free in the hands of the shareholder.

3

What is the Tax Rate applicable on the Buyback of shares?

Under Section 115QA of the Income Tax Act, the company is liable to pay tax at a flat rate of 23.296% [Rate of tax – 20% (plus surcharge @ 12% plus Health and education cess @ 4%) of distributed income.

Income Tax on Buyback of Shares.

4

Hello @Jack_R,

As correctly mentioned by @Chirag1 and @neha1101, the tax on buy back of shares has to be paid by the companies. To avoid double taxation in the hands of companies as well as shareholders, the buy back proceeds are exempt in the hands of shareholders.

Hope this helps!