Is buyback profit taxable?

Yes, buyback profit is taxable, but the tax treatment depends on the date of buyback.

• Buybacks up to 30 September 2024: The company pays buyback tax under Section 115QA at an effective rate of 23.296%. Shareholders do not pay any tax on the buyback proceeds.

• Buybacks on or after 1 October 2024: Buyback proceeds are treated as deemed dividends and are taxable in the hands of shareholders under “Income from Other Sources” at applicable slab rates. The cost of acquisition is allowed as a capital loss, which can be set off against capital gains or carried forward for up to 8 years.