India, March 26 -- The Lok Sabha on Wednesday passed the Finance Bill, 2026, along with amendments moved by Union finance minister Nirmala Sitharaman to clarify the surcharge on share buybacks and improve the efficiency and procedural fairness of income tax administration.

The amendments clarify that a flat 12% surcharge would apply on share buybacks. When the budget was presented on 1 February, the government proposed that the consideration received by a shareholder on buybacks, which had been treated as a dividend for tax purposes until now, would be treated as a capital gain and taxed accordingly at 30% for promoters or 22% for promoter companies.

The applicable surcharge was initially unclear, especially for promoters and high-incom...