Buyback taxation: the 2024 deemed-dividend reform

Sun, 21 Jun 2026 00:00:00 +0000

The 2024 buyback taxation reform is the change made by the Finance (No. 2) Act 2024 that, with effect from 1 October 2024, taxed share-buyback proceeds as a deemed dividend in the shareholder’s hands at slab rate under Section 2(22)(f) of the Income Tax Act 1961, abolished the company-level buyback distribution tax under Section 115QA, and turned the cost of the tendered shares into a capital loss. It shifted the entire tax burden of a buyback from the company to the investor, and it raised the effective rate for most retail shareholders. This article sets out what the reform did, the exact sections that carry it, the worked arithmetic, and where it sits in a buyback tax timeline that has now changed three times in three years.

Section 2(22)(f) on WebNotes

Buyback taxation: the 2024 deemed-dividend reform