Will TCS buy the shares before March 31?

Taxation
1

Will TCS buy the shares before March 31?

I need the money to invest in tax saving mutual fund before the date.

2

I dont need the money as I will have to pay capital gains…

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3

For me its only short term gains, I already have -9.57k in minus on short term gains.

4

35.What will be the impact of tax on buyback?
The Company will pay buyback tax as provided under the Income Tax Act, 1961.
As the Company will pay the buyback tax, any proceeds would be exempt from
taxation under the Income Tax Act, 1961 for the shareholders. However, nonresident shareholders may be subject to additional tax in their country of
jurisdiction. Detailed note to taxation would form part of the letter offer. All
shareholders are requested to consult their tax advisors.

@ ShubhS9 Will the Profit from TCS buyback gets added to short-term gains?

5

You are correct

What will be the impact of tax on TCS buyback?

The income from the accepted buyback share is tax-free. There are no short-term or long-term capital gain taxes on the profits from TCS buyback accepted shares. The buyback price of Rs 4500 is the net price you will get for shares accepted.

But the gain/loss from the sell of the remaining share in the open market (not accepted in buyback offer) will be taxable as usual.

Example:

  1. If you buy 1 share for 3700 and TCS accepts it in a buyback offer, the Rs 800 profit will be tax-free.
  2. If you buy 50 shares at 3700 and 25 shares are accepted by TCS for buyback and the remaining are sold in the open market at 4000. Profit from buyback accepted shares (Rs 80025 = Rs 20,000) is tax-free. Profit from remaining shares (Rs 30025 = Rs 7500 is taxable.

Thanks for the post, learnt a new aspect on taxation with regard to buyback. Always thought needed to pay capital gain.

1 Like
6

Did any one checked Tax P&L sheet from zerodha. Buyback proceeds are appearing as STCG/LTCG in that. As per latest Income Tax Act, it should be tax free at investor’s hand and taxable as buyback tax for company.

7

Yes, the investor does not need to pay any STCG on shares purchased by TCS in the buyback.
The gains from the buyback are tax-free for the investor.

8

I have also the same understanding. Buyback Gains are appearing in Tax PnL Sheet for Zerodha as STCG or LTCG. It will be automatically taken as capital gains during ITR filing. It should be corrected by Zerodha team asap.