The Government of India has issued a clarification on March 25, 2026 regarding an amendment introduced through the Finance Bill, 2026, pertaining to the levy of a surcharge on additional income-tax payable by promoters on capital gains arising from share buybacks. This amendment aligns with the provisions of Section 68 of the Companies Act, 2013, which governs buyback of shares by companies.
As per the amendment, a surcharge at the rate of 12 percent has been prescribed on the additional income-tax payable by promoters on capital gains arising from such buyback transactions.
It has further been clarified that the relevant provisions under Section 69 of the Income-tax Act, 2025, specifically deal with tax rates applicable only to the additional income-tax payable by promoters in respect of capital gains arising from buybacks.
Accordingly, the 12 percent surcharge shall be applicable only on the additional income-tax liability of promoters, as referred to under Section 69(2)(b) of the Income-tax Act, 2025. This ensures that the surcharge is not levied on the entire income, but solely on the specified additional tax component.
In the case of shareholders who are not promoters, the surcharge shall continue to be governed by the existing provisions of the Income-tax Act, and will apply as per normal applicable rates on such capital gains, wherever relevant.
This clarification aims to remove ambiguity and ensure consistent application of tax provisions relating to buyback transactions under the Finance Bill, 2026.
Source from: https://a2ztaxcorp.net/wp-content/uploads/2026/03/Income-Tax-26.03.2026.pdf
