(Video) Rajya Sabha TV (RSTV) The Big Picture: Tax on Share Buyback

Topic: Tax on Share Buyback

Guest:

Akash Jindal, (Economist)
Ajay Shankar, (Former Secretary, Department of Industrial Policy & Promotion)
Sunil Garg, (Tax Expert)

Topic Description:

The Finance Ministry on Friday said that it will look into the applicability of 20 per cent tax proposed in the 2019-20 Budget on the current share buybacks by listed companies. Finance Secretary Subhash Chandra Garg, speaking at a CII event, said the proposed tax on listed companies is aimed at discouraging share buybacks and encouraging investments. Finance Minister Nirmala Sitharaman in her 2019-20 Budget speech proposed to provide that listed companies shall also be liable to pay additional tax at 20 per cent in case of share buyback, as is the case currently for unlisted companies. Share buybacks offer a route for companies to return some wealth to their shareholders, while potentially boosting their stock prices. In a share buyback, a company will absorb or retire the repurchased shares, and rename them as treasury stock.