Flat 12% Surcharge On Buyback Gains
The government has introduced a flat 12% surcharge on buyback gains for individual investors through an amendment to the Finance Bill 2026, changing the earlier slab-linked system. The move is expected to raise the tax burden for many investors earning below Rs 1 crore, while slightly easing it for those above that threshold.
Buyback Tax Surcharge Changed In Finance Bill 2026
Earlier, surcharge on buyback gains was linked to income slabs, which meant investors with lower overall income paid a lower surcharge. Under the new system, a flat 12% surcharge will apply, bringing a uniform rate for individuals regardless of income bracket.
Lower Income Investors May Face Higher Tax
The change is expected to increase tax outgo for individuals with income below Rs 1 crore who participate in share buybacks. For investors with buyback gains above Rs 1 crore, the surcharge has been reduced from 15% to 12%, giving some relief at the higher end.
Buybacks May Become Less Attractive Than Dividends
Market experts quoted in the report said the revised surcharge could make buybacks less appealing compared with dividends, especially for small and mid-sized buyback programmes where many shareholders fall in lower tax brackets. The new tax rules under the Income Tax Act, 2025 are scheduled to come into force on April 1, 2026.
