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Mar 26, 2026
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Finance Bill proposes flat 12% surcharge on buybacks
The Finance Bill, 2026, which was passed by the Lok Sabha on Wednesday, has proposed a flat 12% surcharge on income from share buybacks, resulting in a higher effective tax rate for those with up to Rs 1 crore taxable income.
The Bill seeks to overhaul buyback taxation by shifting the tax burden to shareholders and treating proceeds as capital gains under Section 69 of the Income-tax Act, 2025. But it is the move towards a uniform surcharge—irrespective of income slabs—that is drawing the most attention.
Under the current framework, surcharge on capital gains is linked to income levels of individuals, with no surcharge up to Rs 50 lakh and 10% between Rs 50 lakh and Rs 1 crore. The proposed flat 12% levy would override this structure, leading to a higher effective tax rate for a wide base of individual shareholders.
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