look news india
Mumbai: There is a rush among companies to buy back equity before the new buyback rules come into effect from October. According to a report, 27 companies have announced buyback plans in the two months after the budget.
21 buybacks were announced in the first seven months of 2024. Other companies can also announce buybacks before the new taxation rules come into effect from October 1. According to the rules, companies will not have to start or complete the buyback process before October 1.
In case of buyback from October 1, shareholders will have to pay the tax currently levied on dividend income.
Currently, companies are taxed at 20 per cent on buybacks and investors do not pay tax. The current calendar year has seen 48 equity buybacks so far which is equivalent to 2023.
In the absence of cash-rich IT companies, the size of buybacks in monetary terms is lower than last year. Taxation rules have been amended to remove the difference in tax treatment for dividends and buybacks.