InvestorQ : I want to understand the specific provisions announced by the FM pertaining to buyback tax and the surcharge on FPI income. Has that been impacted?
Aashna Tripathi made post

I want to understand the specific provisions announced by the FM pertaining to buyback tax and the surcharge on FPI income. Has that been impacted?

Answer
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Tisha Malhotra answered.
12 months ago


To begin with, the buyback tax will continue on the budget-prospective basis and not on a retrospective basis. That means for the listed companies that announced buyback before July 5, 2019 they will not be charged tax on buyback of shares. You may be aware that buyback tax is levied at the rate of 20% of the difference between the buyback price and the issue price.

On the subject of surcharge on FPI income, the government has not scrapped the surcharge but it continues as before in the case of capital gains. For all other forms of income, the ne surcharge rate will be applicable. That means; enhanced surcharge will not be applicable on capital gains: To stabilise the flow of funds into the capital market, the government has decided that the enhanced surcharge introduced in Budget of July 2019 will not apply on capital gains arising on sale of equity share in a company or a unit of an equity-oriented fund. FPIs have a wider canvass. The enhanced surcharge shall not apply on capital gains arising on sale of any security including derivatives in the hands of foreign portfolio investors.