Share buyback to be taxed as dividend. Know how it impacts investors
dividend from October 1 and is expected to increase the tax burden on investors. In her Budget 2024 speech on Tuesday, Finance Minister Nirmala Sitharaman announced about the move which the industry sees as counterproductive.
«For reasons of equity, I propose to tax income received on buy back of shares in the hands of the recipient,» Sitharaman said.
Reacting on the development, Aashish Somaiyaa, CEO of WhiteOak Capital Asset Management said that the decision on the buyback can be interpreted as a «double tax». What was unexpected was rationalising of capital gains structure, Somaiyaa said, lamenting on a slew of measures now that would increase tax outgo for investors, that too for the long-term investors across the asset classes. He further called it a negative surprise.
Echoing a similar sentiment, Manish Jain, Director of Institutional Business at m.Stock by Mirae Asset said that the income from buyback of shares being taxed in the hand of recipients was aligned like dividend distribution tax which is happening towards double taxation.
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«It should have been the other way round that taxes on dividends should have been removed,» he added. STT is increased for F&O but this increase is not really meaningfully helpful to curb any
