Section 46A - Capital gains on purchase by company of its own shares or other specified securities - Income Tax - Ready Reckoner - Income Tax

Section 46A : CAPITAL GAINS ON PURCHASE BY COMPANY OF ITS OWN SHARES OR OTHER SPECIFIED SECURITIES Where a shareholder receives any consideration from any company for purchase of its own shares held by such shareholder, then, subject to the provisions of section 48 , the difference between the cost of acquisition and the value of consideration received by the shareholder, shall be deemed to be the capital gains arising to such shareholder, in the year in which such shares were purchased by the company. NOTE: After introduction of Section 115QA and Section 10(34A) ; Section 46A shall not apply on buyback of Unlisted shares. TAX IMPLICATION IN HANDS OF THE COMPANY WHEN LISTED SHARES ARE BROUGHT BACK BY THE COMPANY 1. There will be no deemed dividend on buy back of shares under section 2(22) . Consequently section 115-O shall not be attracted. 2. Section 115QA shall not be attracted since shares are listed. 3. No other tax implication in the hands of the company. TAX IMPLICATION IN HANDS OF SHAREHOLDER OF A COMPANY WHEN LISTED SHARES ARE BROUGHT BACK BY THE COMPANY Amount received on buy back = sales price Amount paid for acquiring the shares = cost of acquisition Period of holding = date of acquisition to the date of buyback Benefit of first proviso or second proviso to section 48 is available. Valuation of Buy - back on or after 01.10.2024 [ Inserted vide Finance (No. 2) Act, 2024 ] Where the shareholder receives any consideration of the nature referred to in section 2(22)(f) (i.e. Buy-back of share) from any company, in respect of any buy-back of shares, that takes place on or after the 1st day of October, 2024, then for the purposes of this section (i.e. Section 46A ) , the value of consideration received by the shareholder shall be deemed to be nil . For the purposes of this section, specified securities shall have the meaning assigned to it in Explanation to section 77A of the Companies Act, 1956. (a) specified securities includes employees' stock option or other securities as may be notified by the Central Government from time to time;