16 companies have announced share buyback since July 23. Income tax rules on share buyback will change from October 1. Currently, companies have to pay tax at the rate of 20 percent.
New Delhi. There is good news for those investing in the stock market. If you have stocks of these 16 companies, then you are getting a chance to earn bumper profits without any hard work. These companies have offered their investors to sell shares at a higher price than the market price. Those selling their shares in this offer will not only make a profit, but will also save their tax. If you miss it now, then under the new rules, you will also have to pay a hefty tax on such profits. Let us remind you that the government had made a big change in the tax on such profits in Budget 2023 itself.
Actually, we are talking about share buyback. Since the presentation of the budget on 23 July this year, 16 companies have offered share buyback so far. Companies have suddenly decided to buyback in large numbers because the tax rules on buyback are going to change from 1 October. Companies believe that from October people will not like to sell shares under buyback due to fear of tax.
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Buyback of Rs 4,301 crore
Out of the 16 companies that are offering buyback, 14 have also announced the amount of shares they will buy back. 14 companies have announced a total of Rs 4,301 crore. In this, Indus Tower has announced the highest amount of Rs 2,640 crore. After this, AIA Engineering has offered a share buyback of Rs 500 crore and Welspun Living has offered a share buyback of Rs 278 crore. Other companies include TTK Prestige, Sierra Sanitaryware and Navneet Education, which have talked about share buyback of Rs 7 crore to Rs 200 crore.
What is the change in tax
The government had said in Budget 2024 that from October 1, 2024, investors will have to pay income tax as per their tax slab on the profits earned from share buyback. At present, this tax has to be paid by the companies, which is levied at a fixed rate of 20 percent, while investors will have to pay tax as per their slab. However, if the investor incurs a loss, he can compensate for it for the next 8 years under capital gain loss.
Why do companies do buybacks
The purpose of buying back shares from investors is to make them profit, because in buyback, companies buy their stocks at a premium over their market price at that time. In the last 5 years, companies have bought back shares worth about Rs 1.5 lakh crore. In this, the maximum share buyback of Rs 48,452 crore has been done in the year 2023.
Tags: Business news, Share market, Stock Market
FIRST PUBLISHED : August 14, 2024, 14:32 IST
