Buy back of shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2016 RESPECTED SIR,
AN UNLISTED LIMITED COMPANY IS HAVING PAID UP SHARE CAPITAL 100000 SHARES OF RS. 100/- EACH AGGREGATING TO RS 100.00 LACS. ALL THE SHARES IS IN THE NAME OF ITS DIRECTORS ONLY. THE FAIR MARKET VALUE OF SHARES AS ON DATE IS RS. 130.00 PER SHARE.
SIR, THERE IS NEED OF FUND IN THE INDIVIDUAL FILES OF DIRECTORS, BUT THERE IS NO FUND.
SIR,AS THE COMPANY CAN NOT GIVE ADVANCE TO ITS DIRECTORS WANTS TO BUY BACK OF ITS SHARES.
SIR WHAT WILL BE THE PROCEDURE OF BUY BACK AND WHAT WOULD BE TAX TREATMENT IN THE HANDS OF DIRECTORS AS WELL AS ON THE COMPANY
SIR PLEASE GUIDE ME
WITH REGARDS

Mandar

Mandar (Expert)
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13 July 2016 Please follow the Link for Procedure of Buy Back : -http://taxguru.in/company-law/buyback-equity-shares-unlisted-public-company-simplified-procedure.html

Taxation aspect of Buy Back :- Section 115 QA of Income Tax Act , 20% on the distributed income , "Distributed income" means the consideration paid by the company on buy-back of shares as reduced by the amount, which was received by the company for issue of such shares, determined in the manner as may be prescribed