Tax implication for buyback of shares

Hello Deepak,

The Buy back taxability has been explained in Sec 115QA, which states that

 Any amount of distributed income by the company on buy-back of shares (not being shares listed on a recognised stock exchange) from a shareholder shall be charged to tax and such company shall be liable to pay additional income-tax at the rate of twenty per cent on the distributed income.

The consideration recived by receipeient on account of buy back is explained sec 46A, which states that:

Where a shareholder or a holder of other specified securities receives any consideration from any company for purchase of its own shares  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 or other specified securities were purchased by the company.

Thanks Saurabh.Here the book value is Rs60/- which i forgot to mention and the company is buying back @ 20/-.

The tendererer had bought @ 100/- and sold @ 20/-.Book value is Rs 60/-.Company is gaining and tenderer is loser.

What is the income tax implication.

Yes it shall be loss to the seller, is it long term or short term

So the buying company is not being affected in any manner.

No, only if it distributes income on the same shares

Thanks Saurabh